New drugs to cost government $50 billion

Ten drugs approved over the last six months or in the final trial stages will raise the government’s spending on Medicare, Medicaid and Obamacare subsidies by nearly $50 billion over the next 10 years, according to analysis commissioned by America’s Health Insurance Plans.

Five of the drugs treat cancer and three others treat hepatitis C. One drug treats the most common eye disease experienced by diabetics. Another treats cystic fibrosis.

Skyrocketing drug costs are a major concern for healthcare payers, both public and private. But they’re likely to disproportionately affect the Medicare program, which cover older Americans more at risk for cancer, diabetes and other serious acute and chronic conditions.

Last year, Medicare spent nearly 14 percent more on drugs than the year before, an enormous jump primarily linked to new, expensive medications to treat hepatitis C. Nearly half of the new spending growth was driven by products entering the market in the last two years, the report estimates. Medicare will spend about $31.3 billion more for new drugs over the next 10 years, it says.

“Patients rely on innovative, life-saving medications, but soaring prices jeopardize access for those who would benefit the most from these treatments,” said the insurance group’s interim CEO Dan Durham.

“With the future cost challenges facing patients and the health system, more needs to be done to increase transparency around prescription drug costs and to advance a sustainable pricing solution that will ensure patients can access the medications they need,” Durham said.

All 10 of the drugs examined in the report are designated as “breakthrough” therapies by the Food and Drug Administration, because they have been shown to treat a serious or life-threatening disease better than an existing drug. Under that designation, they get approved more quickly and receive more intensive federal guidance along the way.