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October 9, 2019

Drug industry riled by state cost report

Prescription drugs are seen as the primary driving of rising health insurance costs.

Both locally and nationally, the life sciences and prescription drug sectors are pushing back in the wake of another report showing drug costs are helping to drive overall health care costs higher.

A Center for Health Information and Analysis report released Tuesday found that pharmacy spending in Massachusetts of $9.9 billion in 2018 was up 5.8 percent, or 3.6 percent after accounting for rebates.

The national group Pharmaceutical Research and Manufacturers of America responded by pointing to growth in hospital inpatient, hospital outpatient and other professional services that "all outpaced prescription drug growth last year."

"We encourage CHIA to account for the rebates retained by pharmacy benefit managers, as well as hospital markups of prescription drugs, in next year’s report to provide a more accurate look at health care costs in the Commonwealth," Tiffany Haverly, a PhRMA spokesperson, said in a statement.

Locally, Massachusetts Biotechnology Council President Robert Coughlin said the report showed the net spending growth rate on prescription drugs after rebates declined for the third straight year. Coughlin describes prescription drugs as the "fourth-smallest contributor" to the increase in total health care expenditures.

"As our state’s policymakers consider healthcare reform legislation this session, we urge them to look carefully at the real drivers of healthcare costs in Massachusetts and examine why health insurance out-of-pocket costs and premiums are growing at twice the rate of inflation and substantially faster than the state’s at-benchmark 3.1 percent total healthcare expenditure growth rate," Coughlin said in a statement.

The costs and benefits of prescription drugs are shaping up as a major talking point for this year's annual costs trends hearing. The Health Policy Commission plans to host those talks Oct. 22 and 23 at Suffolk University Law School.

Lawmakers included provisions to rein in some prescription drug costs in the fiscal year 2020 budget. Under that language, the Executive Office of Health and Human Services can negotiate with MassHealth on supplemental rebates for the most expensive prescription medications.

Gov. Charlie Baker had originally proposed allowing MassHealth to negotiate directly with drug manufacturers on prices and using a Medicaid-like public rate-setting process for the highest-cost prescriptions, but he signed onto the version lawmakers proposed in their final budget.

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