Lower drug inflation rate predicted for 2019
Drug prices are expected to increase just 4.92 percent in 2019, driven primarily by specialty pharmaceuticals.
It’s a good news/bad news kind of thing: while inflation in drug prices is expected to continue in 2019, it won’t be as bad as it was last year. Prices are expected to increase just 4.92 percent, a welcome change compared with the 7.61 percent inflation in pharmaceutical prices projected for 2018.
Those numbers come from Vizient, Inc.’s most recent Drug Price Forecast. Although it cautions that even if those slower growth projections hold, the specialty pharmacy market will continue its rapid growth and account for the majority of inflation. In fact, 46 percent of the total amount spent on drugs in the U.S. is on specialty pharmaceuticals, even though they’re only used for very small and targeted patient populations.
Related: This enrollment season, target drug costs to control benefit spend
“Two key themes we saw were the continued growth of specialty pharmacy products as a share of total spending and the critical importance of ongoing, robust generic and biosimilar competition on restraining overall price growth,” Dan Kister, Pharm.D., senior vice president, pharmacy solutions for Vizient, is quoted saying.
The need for competition becomes clear when considering that 79 percent of the projected price inflation in the report will be caused by drugs with no competition. In addition, the focus of the White House on bringing down medication prices “increases the likelihood that changes will be implemented” in the “dynamics that result in higher prices.”
At the moment, that’s hard to imagine, since new products keep entering the market at “higher and higher prices,” such as Novartis’s Kymriah ($475,000) and Kite Pharma/Gilead’s Yescarta ($373,000). But the “winner” is Spark Therapeutics’ Luxturna, an in vivo gene therapy product to treat a rare type of vision loss, at $850,000—the cost to treat both eyes.
The report also finds that shortages due to the effects on production of Hurricane Maria and some of the strategies used to address the opioid epidemic are also putting pressure on the supply chain, resulting in unexpected supply limitations.
Then there are reimbursement issues, such as reduced payments for disproportionate share hospitals implemented by CMS and the increasing focus on the differences in cost when a treatment is administered in a physician’s office compared with in an outpatient infusion clinic.
Vizient’s inflation estimates are based “on price change history during the last 36 months, as well as current knowledge of contract allowances and marketplace factors, such as expiring patents and anticipated new competition.”