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This Week in Health Care Reform - May 6th, 2016

Drug prices seem poised to be the pressing health care policy issue for the next Administration; a pair of states edges closer to embracing telehealth; and, a new report highlights the impact that locality has on health care prices.


Week in Review

Rx Shadow: Despite the intense criticism directed towards them in recent years over escalating prices, drugmakers continue to raise prices on brand name medications, some by double-digits since the start of this year, alone.  In a recent interview, experts from two major drug-benefit managers called attention to that rate of increase, only echoing the recent findings in an unrelated report from IMS Health released late last month, which found that list prices for drugs increased more than 12 percent in 2015.  Mapping out that trend-line over the next few years, it’s looking increasingly likely that prescription drug cost growth will be the top health policy challenge facing the next Administration, at least according to one current official.  One need only look at the spike in the cost of certain oral cancer medicines to see why.  With the cost of these drugs going up dramatically since 2000, the burden on our health care system (generally) and on patients (specifically) is cause for alarm.  A pair of studies brings further attention to the issue.  Appearing in Health Affairs latest edition, the first study found that the price of oral cancer medicines recently approved by the FDA increased by 5 percent each year from 2007 to 2013.  The second study took a look at spending on cancer drugs and its impact on health in the United States and eight other countries and found that, despite spending more on these medicines than the other countries, the U.S. lags behind them in health gains per dollar spent, suggesting a glaring value disconnect.

Advancing Telehealth:
Alaska and Louisiana are poised to join the rest of the country as their state capitals inch closer to removing some of the barriers that have been identified as standing in the way of telehealth’s advancement within their respective borders.  Two of the last remaining holdouts amongst the states, both legislatures have passed – or are in the process of passing – bills that would pave the way for the expanded utilization of telehealth services, allowing them to finally reap some of the benefits of its embrace.  Nevertheless, despite these latest efforts, a quick scan of the landscape shows an inconsistent and varied focus across the country on easing the regulatory environment which surrounds telehealth, resulting in incremental progress on the road to widespread adoption.

Price Disparities:
Last week, the Health Care Cost Institute (HCCI) released its latest report analyzing the price variations that exist for different procedures across the country.  The National Chartbook on Health Care Prices uses claims and payment data from insurers to map out the average price for 242 medical services from state to state, and city to city.  The results point to a wildly inconsistent price distribution seemingly untethered to any predictable geographic pattern.  While the experts believe a number of factors contribute to this systemic variation, including how differently the health care market operates from traditional economic markets, one major factor that they were able to identify is the correlation that exists between hospital consolidation and higher prices.

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