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AHA, AARP blast big pharma for not doing enough to curb drug price increases

Big pharma must shift focus off marketing and onto its own cost-cutting, the groups say.

Beth Jones Sanborn, Managing Editor

American Hospital Association President and CEO Rick Pollack, along with the CEO of the American Association of Retired Persons Jo Ann Jenkins, called out the pharmaceutical industry for not doing its part to cut healthcare costs.  

Pollack and Jenkins cited recent research showing that drug prices have continued to spike in recent years at alarming rates. A report released by U.S. Senator Claire McCaskill, top-ranking Democrat on the Senate Homeland Security and Governmental Affairs Committee, said that every brand-name drug on the list of the top 20 most-prescribed brand-name drugs for seniors increased in the last five years, with the average hike being 12 percent every year for the last five years, roughly ten times higher than the average annual rate of inflation.

The report also showed that 12 out of the 20 drugs most commonly prescribed to seniors increased by more than 50 percent in the five-year period, with 6 of the 20 seeing increases of more than 100 percent. 

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"In one case, the weighted average wholesale acquisition cost for a single drug increased by 477 percent over a five-year period," that report said. 

A separate report from a Pharmacy Benefits consultant showed that from January 2017 to March 2018 the prices of 20 prescription drugs skyrocketed by more than 200 percent.

Jenkins and Pollack, to that end, wrote in an op ed published in The Hill that pharmaceutical companies should "work as hard at lowering the price listed outside of a medication model as it does trying to sell the product within it."

The Centers for Medicare and Medicaid Services has released projections that show retail spending on prescription drugs will be the fastest growing area of healthcare spending over the next decade, they added, noting that drug companies have already seen $8.5 billion in increased revenue.

Hospitals and health systems feel the impact of such drug hikes as it ripples through the care continuum. A study by AHA in 2016 showed that inpatient drug costs spiked on a per patient basis by 39 percent from 2013 to 2015. When increases like that happens, it forces hospitals to compensate elsewhere in their budgets in the cost of staff salaries, upgrades and modernization of equipment and facilities.

With nine out of ten leading pharmaceutical companies devoting more funds to advertising and marketing than the development of new drugs, the trickle down effect felt by hospitals and patients will continue, Pollack and Jenkins said, even though hospitals pitch in to the cost-cutting effort by streamlining patient care, using technology and home visits to cut down on readmissions, forming ACOs and implementing new payment models.

"Ultimately, the current system of exorbitantly-priced drugs is unsustainable for everyone -- patients, employers, insurers, and taxpayer-funded programs like Medicare and Medicaid," Pollack and Jenkins worte. "We stand ready to work together to find commonsense and innovative solutions that will help make drugs affordable for everyone. It's time."

Twitter: @BethJSanborn
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