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This Week in Health Care Reform: August 24th, 2018

Health care costs are projected to continue to rise in 2019; Medicaid expansion is shown to increase opioid treatment efficacy; spending on drugs makes up more of overall health care spending than previously claimed; and, generics could have saved Medicare nearly $1 billion.

Week in Review

Cost Projections: In its latest survey of large employers, the National Business Group on Health found that an increasing number of them are playing an activist role in improving the health care delivery system, while also exploring ways to improve existing models.  Additionally, the majority of these companies believe that technology and virtual care will play a critical role in reshaping how health care is delivered in the future.  However, these positions notwithstanding, employers project the total cost of providing their workers with medical and pharmacy benefits will increase 5 percent next year, the sixth such consecutive increase, rising from 2018’s $14,099 per employee to an average of $14,800 in 2019.  Employers point to high-cost claims, specialty pharmacies, and specific diseases as being the primary drivers of this increase.

Medicaid & Opioid Treatment: Contrary to the claim that Medicaid expansion has exacerbated the opioid crisis, a pair of new studies provides evidence that expanding the program has, in fact, not only enhanced states’ roles in providing opioid use disorder treatment, but has also resulted in substantial utilization and availability gains to clinically-efficacious and cost-effective treatments, as well.  The first study found an 18 percent increase in aggregate opioid admissions to specialty treatment facilities in expansion states compared to non-expansion ones.  The other study took a somewhat different approach, comparing prescription fills for an opioid use disorder treatment across five states.  Researchers found a significant overall increase in people filling those prescriptions in those states that expanded their Medicaid programs.

Drug Spending:
A new analysis projects that drug spending will go up nearly 5 percent next year, in large part owing to drugs that have no competition.  That figure, while not insignificant, represents something of a downward shift from this year’s 7.61 percent increase.  Experts caution that, rather than signaling a potential slowdown in drug cost growth, specialty pharmaceuticals are forecasted to maintain their upward trajectory and will continue to account for most of the overall price inflation.  Separately, a new report estimates that prescription drugs accounted for nearly 15 percent of overall health care spending in the U.S. in 2016, higher than the 10 percent spending total frequently put forward by the pharmaceutical industry.  Pointedly, researchers go on to estimate that drug manufacturers managed to pocket $323 billion – or two-thirds – of the total $480 billion spent on pharmaceuticals that year.

Generics in Medicare:
Medicare could have saved nearly $1 billion if it had used generic versions of pricey combination drug-device products instead of the brand-name versions, according to a new study published by the Journal of the American Medical Association.  The report looked at spending in the program in 2016, specifically, on 29 of those combination products, before comparing those costs to what it would have had to spend on generic equivalents.  The analysis determined that Medicare could have saved $925 million if it had substituted the brand-name product with the less expensive generic alternative.  The study goes on to conclude that a combination of provider education (namely, steering doctors towards prescribing generics) and more rational substitution policies in Medicare would offer the program important opportunities to achieve substantial savings.      

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