Medicaid drug-spending hikes rile lawmakers, but there's no end in sight

Joe Parks

Medicaid programs across the country are suffering from an overnight increase in drug spending, fueled primarily by pricey hepatitis C drugs. But treatments for that disease are far from the only meds whose rising prices are taking a bigger bite out of state budgets.

For one illustration, take a look at Missouri's Medicaid program. Its drug costs jumped 33% to $1.16 billion from 2010 through 2014, the Associated Press reports, and the increase has lawmakers upset.

"Is it bad luck everything keeps going up this dramatically? Is there ever a cap to this?" the state's House Budget Committee Chairman Tom Flanigan asked during a recent hearing. "Are we going to come back next year and look at $200 million? Is there a level out?"

New specialty drugs with hefty price tags are partly to blame for the phenomenon, as are the rising costs of generic medications. And to Flanigan's question, the trend isn't going away anytime soon, Joe Parks, director of the state's Medicaid program, said at the hearing.

"There is no cap and I expect it will keep going up," Parks told the Missouri House Budget Committee. "This country has decided as public policy to manage its pharmacy prices on an open market model."

Each new drug is an "individual special problem" and will only keep pushing the state's pharmacy costs higher, Parks said (as quoted by the AP).

Bristol-Myers Squibb's ($BMY) antipsychotic Abilify rang in as the most expensive drug in Missouri's Medicaid program, costing the state more than $75 million in 2014 for 15,000 patients. The drug, which contributed $2.02 billion to BMS' sales in 2014, is set to go off patent this May.

But the state's most expensive treatment on a per-person basis was a blood clotting factor for hemophilia. The per-patient cost for the treatment ranged from $186,000 to $264,000, according to Department of Social Services (DSS) data cited by the AP.

It's no surprise that Gilead's ($GILD) hep C blockbuster Sovaldi also raised eyebrows with its $84,000-per-treatment price tag. Missouri's Medicaid program provided the med to 311 patients at a cost of $26 million in the fiscal year ending June 30, 2014. But the DSS in January announced a deal with Gilead's rival, AbbVie ($ABBV), to make the company's Viekira Pak its preferred hep C treatment--a move estimated to save the state about $4.2 million, the AP reports.

Missouri's budget woes come as more states lay out their own measures to counter skyrocketing drug costs. The hep C pricing battle between Gilead and AbbVie in particular has allowed states to negotiate discounts of 40% or more for the drugs, a move that could widen coverage for the meds. But most states are still limiting access, citing pricing concerns as an inhibiting factor.

"Total costs will go up," said Matt Salo, executive director of the National Association of Medicaid Directors. "While we're fortunate that the price per pill has come down from $1,000, it's still too high to provide complete access for the millions of infected patients in this country.

- read the AP story

Special Report: The Top 15 Pharma Companies by 2014 Revenue - Bristol-Myers Squibb | The 10 Best-Selling Drugs of 2013 - Abilify

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