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Sat 19 Apr, 2008 11:04 pm
April 19, 2008
Medicare Plans Affected by Rising Drug Costs
By MILT FREUDENHEIM
Employers and patients in corporate health plans are not the only ones affected by the soaring prices of specialty drugs. Enrollees in Medicare drug plans are also feeling the pressure.
Many leading pharmacy benefit managers and drug insurers that oversee employer plans also offer coverage through the Medicare Part D drug insurance program, and so are profiting from federal spending on specialty drugs and from Medicare patients' own high out-of-pocket co-payments.
Driven in part by specialty drugs, the prices of medicines heavily used by the elderly have risen more than 24 percent since June 2006, two senior health economists at Harvard reported in January in the policy journal Health Affairs.
In that article the economists, Richard G. Frank and Joseph E. Newhouse, said single-source unique drugs have the potential to present "important new pressures on the federal budget."
Many Part D plans segregate specialty drugs in a special tier, where a Medicare enrollee pays 25 to 33 percent of the price, according to Jack Hoadley, a research professor at Georgetown University. At that rate, patients quickly reach the $5,726 cap on out-of-pocket spending, after which the patient pays only 5 percent. From that point, the drug plan sponsor pays 15 percent, while Medicare pays 80 percent of the cost.
The trend, the Frank-Newhouse article said, bodes ill for "the worrisome future financial health of Medicare."
NYTimes
from an interview with the president of switzerland about the cost of drugs :
Quote:You have some of the world's greatest pharmaceutical companies. Do you have a problem controlling [drug costs]?
Yes. The cost of drugs are controlled, and the prices of drugs are fixed by the government. ... [But] if we compare the prices of drugs in Switzerland and the neighboring countries, it is higher in Switzerland.
You pay more for the same pill?
Yes. And ... we wanted to discuss the problem, and we took some measures to reduce the prices. First of all, we decided that where it is possible to have generics, people have to take generics, or if they do not take generics, they have to pay part of the price [on] their own. ... And after that, we systematically compare the price of the most-used drugs with the cost of the most-used drugs in the neighboring countries, and we reduce the prices of the drugs in Switzerland.
You reduce the prices. And then what does this big Swiss pharmaceutical industry say?
Two things. First of all, they accepted generics, ... and they also accepted to reduce the prices of the original drugs, which were more expensive in Switzerland. ... What they want is that we pay much more for the new drugs with a great value added, and we accept that. For cancer [drugs], perhaps we pay a little too much, in my opinion; we can still have a discussion about that. But we are very open for new drugs with huge therapeutic advantage. ... We try to support innovation and not to support profits in [and of themselves]. ...
... We have big drug companies in America, and they say, "Americans should pay high prices because that's the price of innovation." ... Do you buy that argument? Is it legitimate?
Partially. But if you look at the expenses of a great pharmaceutical company, ... they pay between about 10 to 15 percent of their expenses for research, but they use 30 to 40 percent of their incomes for marketing and promotion. ... It is not completely wrong that they spend so much, but it is not correct to say that there is a direct connection between the price of drugs and the cost of research. It could be more between the cost of marketing and the cost of the drugs.
source :
SWITZERLAND
(it also links with the full report on healthcare costs)
or see :
HEALTHCARE COSTS IN OTHER COUNTRIES
More and more of the generics used in the US are coming from India, Israel...etc.
Even from China!
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