Medicare chief tells biopharma its price increases are 'unsustainable'

PillsandMoney

The public and political backlash over price jumps of EpiPen put Mylan in the hot seat this fall and left the company’s share price badly beaten. But according to the head of the Centers for Medicare & Medicaid Services (CMS), EpiPen is not on its list of worst offenders. With price increases having become “unsustainable,” he warned the industry that the agency has to do something about it.

“Mylan’s Epipen is not even on our top 20 list for either high price increases or spending overall in 2015," said Andy Slavitt, acting administrator for the CMS. Those drugs on the list have been ongoing problems, he said, "with real patient impact and some are big stories waiting to happen.” His remarks to the Biopharma Congress in Washington, DC, came just days before Tuesday’s election and included a suggestion that things will change.

The administrator said the agency is working with the industry on innovation by investing in research and issues like value pricing. But, Slavitt said, “[d]rug costs have become the health policy issue Americans are most anxious to see us act on, and we have a responsibility to them to explore all the options available us to make their medications more affordable.”

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He said Part B Medicare spending doubled from 2007 to 2015, while Part D costs increased 8.4% in just the years between 2013 and 2015. Through 2025, the centers forecasts average annual increases of 6.7%.

He pointed to one culprit that has become more talked about in recent years, the cost of specialty drugs. Based on 2014 data, they represented 31.8% of costs but only 1% of prescriptions. But he also said that of the 20 drugs with the highest per-unit cost increases in Medicaid, seven were generic drugs, whose price leaps ranged from 140% to nearly 500% between 2014 and 2015.

When he spoke at the Biopharma Congress a year ago, Turing Pharma’s 5,600% price increase was dominating the pharma news and Slavitt defended the biopharma industry saying it shouldn’t be defined by its “worst actors.” But last year, he said data have revealed that there are more than a few bad actors in the industry. “[T]he more data that’s revealed, the more bad actors you find, and I’m telling you now: It’s too many.”

Recent earnings reports by drug distributors like McKesson have indicated that price increases have actually slowed this year, but in the meantime drug prices have become a hot political issue. Slavitt’s remarks came only days before Tuesday’s election. The latest polling indicates Democratic presidential candidate Hillary Clinton is more likely to win, and there's a good chance that Democrats will retake control of the Senate, which would give her more power to push her agenda.  

In September, Clinton provided a look at what she intends to do about drug prices. That includes establishing a drug price oversight group to ensure patient access to lifesaving drugs and to scour for “outlier” price increases, accounting for a treatment's production costs and its value to patients. She intends to push for enforcement tools that include fines on companies that take excessive price jumps, emergency importation of competing products and other measures to spur competition.

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