Tag Archives: Medicaid

Should the Government Regulate Prescription Prices, Part 1

Consider these recent headlines:

The cost of Biogen’s new drug: $750,000 per patient

Gilead’s New Hepatitis C Drug Approved by FDA, Priced at $74,760

Hospitals Furious at Cancer-Drug Price Hikes

Got Insurance? You Still May Pay A Steep Price For Prescriptions

There is quite a bit of unhappiness about drug prices these days.  One of the proposed solutions to the problem of high drug prices is to have the federal government negotiate or regulate prices.  In the next few blog posts, I’ll examine various arguments that support government regulation of prescription drug prices and some that oppose it.  But first, in this post, I’ll provide some basic background on the prescription drug market that I think is useful in understanding the arguments for and against government regulation of prescription prices. Continue reading

ASCO releases value framework for assessing value of cancer drugs

It’s no surprise that costs of cancer drugs are high.  Recent estimates put the average cost of cancer drugs at $10,000 per month with some therapies costing as much as $65,000 per month.  If it weren’t for insurance, prices this high would put cancer drug therapy out of reach for most families.  Even with insurance, many families cannot afford cancer drugs because of high patient cost sharing.  Many insurance programs, such as the Medicare Part D program, set patient cost sharing as a percentage of the drug’s cost (usually in the 20% to 30% range) rather than as a fixed dollar amount.  Medicare Part B, which covers most injectable cancer drugs, has a patient cost share of 20%.  How many families can afford cost sharing of $2,000 to $3,000 per month?

Oncologists and their professional organizations are concerned about this and have taken steps to address the problem.   The WSJ  recently reported that Memorial Sloan Kettering Cancer Center has developed an on-line, interactive tool to help physicians and patients determine what cancer drugs are worth.  I will discuss this tool in next week’s post.  Today’s post will discuss a value framework for assessing the value of cancer drugs that was recently announced by the American Society of Clinical Oncology (ASCO),  the professional organization representing oncologists.

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Changes in pharmacy reimbursement

Big changes are occurring in Medicaid reimbursement for prescriptions and, surprisingly, this has received little attention in the pharmacy press.  Medicaid agencies in 9 states have switched from reimbursement based on Average Wholesale Price (AWP), which provides pharmacies’ with bigger profits on more expensive drugs, to one based on pharmacies’ actual acquisition costs (AAC), where profits are determined by the dispensing fee.  If this trend spreads to private payers, it could have a huge impact on pharmacies’ profits and viability. Continue reading