WHO KNOWS
An interview with Stephen Crystal, Ph.D., Research Professor and Chair, Division on Aging, and Associate Director for Research, Center for State Health Policy at the University of New Jersey, Rutgers.
What should legislators know about the rising cost of Rx drugs?
From a legislators point of view there are two crises. One is the crisis of increased costs to state for people who have state-funded coverage such as Medicaid or state pharmacy assistance programs. Those costs are escalating at a dramatic 15%-20% rate each year. The other crisis is the crisis of affordability for people who don't have coverage. Whatever the current level of commitment a state has now, the cost of that commitment is increasing. Rising drug costs are a growing problem. There is a lot of creative activity among states in addressing the issue and there is a great deal to learn by looking at those other states.
What do you see as the most significant factors contributing to the rising costs of RX drugs?
It is a combination of 1) increasing prices of existing drugs; 2) substitution of expensive new drugs for less expensive drugs; and 3) increased utilization of prescription drugs. The substitution of expensive new drugs and the increasing utilization of drugs are the most important factors. These three factors are driven by technological progress, drug development, and direct-to-consumer advertising. There is a trend throughout the Us of people taking more new drugs each year and there is clearly an effect of direct-to- consumer marketing.
What state activities if any do you feel are particularly effective in dealing with the problem of prescription drug pricing?
With the approval of a Medicaid waiver program in Illinois to provide pharmacy assistance to the elderly and disabled, the administration has signaled that it may be receptive to waiver approaches from other states, with federal financial participation.. Potential waivers may present one of the best opportunities for states to deal with rising costs of prescription drugs. Other potential state activities include discount programs, where CA has taken the lead, different ways of negotiating rebates from manufacturers, multistate purchasing cooperatives, and insurance models such as the one in Massachusetts.
What should we expect to see in the future?
We should expect intense legislative policy debate on the state level regardless of what happens on the federal level. States should begin pressing the federal government on this issue. It's going to be an increasing challenge to meet these needs without federal help. There is going to be increasing financial pressure on the states and increasing pressure on the federal government from the states. We are going to see new ways to improve affordability within the states and an intense dialogue amongst key stakeholders including consumers, pharmacists and manufacturers.
Does the RX drug issue affect the public and private sectors differently?
Trends in pharmaceutical pricing and utilization have hit both sectors. States are where people go to seek coverage when they lack private coverage, and states have been hit by HMOs discontinuing or limiting drug benefits. States have been hit by price increases in similar ways, but are also the place where people come for help when they need drugs.
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