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This Week in Health Care Reform: June 1st, 2018

Mergers between drugmakers are shown to have a negative impact on the release of new medicines; meanwhile, spending on cancer drugs skyrockets; new legislation is proposed to suspend an unpopular health care tax; and, stakeholders question who’s responsible for social determinants of health.

Week in Review

Drugmakers: According to the findings of a new working paper from Yale and the London Business School, mergers between pharmaceutical manufacturers are doing more than just increasing costs for consumers – they’re also reducing the number of new drugs being brought to market.  In fact, researchers determined that these mergers result in 5 percent fewer medicines becoming available to patients each year.  This only serves to further the already well-established narrative surrounding the role that drugmakers play in continuing to overburden our health care system with the unsustainable costs of their products.  A separate analysis hammers home this point, estimating that the tactics employed by brand-name drug manufacturers to block generic competition have allowed these companies to hike their prices by double digits since 2012, costing public programs, like Medicare and Medicaid, nearly $12 billion in 2016 alone.

Cancer Drugs: Meanwhile, cancer patients also find themselves increasingly vulnerable to the escalating prices of their drugs, prompting more of them to delay treatment or cut back on their medications.  In a survey conducted a few years back at the Duke Cancer Institute of hundreds of adult, insured patients, nearly 40 percent reported experiencing a higher-than-expected financial burden, with a further 16 percent citing a level of “overwhelming financial distress.”  Unfortunately, those results only hinted at what has since established itself as an unsustainable trend, as spending on cancer drugs has doubled over the past five years according to a new report from the IQVIA Institute for Human Data Science.  Alarmingly, every new cancer drug brought to market last year cost more than $100,000, with the average being $150,000, compared to the average $79,000 cost last measured in 2013.  And, perhaps most distressingly of all, those costs are expected to double again by 2022.

HIT Suspension Bill:
A new bipartisan bill was introduced last week aimed at providing relief from the onerous health insurance tax (HIT) for hard-working families, seniors, and small business owners.  Sponsored by Rep. Kristi Noem (D-South Dakota), and co-sponsored by Reps. Jackie Walorski (R-Indiana), Kyrsten Sinema (D-Arizona), and Ami Bera (D-California), the legislation would suspend the HIT for 2020, reducing premiums by an estimated 3 percent for consumers.  The proposed bill was immediately met with support, as estimates point to an average of $570 in lower premiums and cost savings for employees of small businesses and their families should the HIT be suspended in 2020.

SDoH Responsibility:
As our understanding of the role that environmental factors play in our overall health continues to gain traction, there’s a corresponding movement towards making sure that our clinical care delivery model also evolves to allow for the better integration of social determinants of health (SDoH) into the growing focus on value-based care.  This, in turn, has led to stakeholders asking the question of who, ultimately, bears responsibility for ensuring that SDoH is appropriately incorporated into that redesigned model of care delivery?  Given the fluidity of how our system writ large is approaching the issue, it should come as no surprise that not everyone shares the same enthusiasm when it comes to embracing the manner in which we address SDoH.  For their part, providers agree that these factors are an important component of patient wellness – however, where they diverge is in their assumption of the systemic responsibility they bear in tackling the issue, insomuch as their reluctance to add an additional administrative burden to their already full plates.      

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A new analysis from AHIP seeks to illustrate exactly how our health insurance premium dollar is carved up, with the largest portion going (unsurprisingly) to prescription drugs.  When combined with medical costs, that spending accounts for more than 45 percent of the average health care dollar – and, is on the rise.

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