Why is health ERIC JOHNSON COMEDYCE.COM insurance so expensive (and what can you do about it)? MARCH 19, 2019 efg&m Quarterly Inform and Educate Luncheon
Cost Drivers • Rising health care costs • Regulations that don’t work • The third-party payment system Today’s Topics How to keep costs under control • Employers • Employees
Why is health COST insurance so DRIVERS expensive?
Health Insurance is Expensive Because HEALTH CARE IS EXPENSIVE!! Insurance companies pay the bills, so the price we pay for health insurance is merely a reflection of health care prices in America. As health care costs go up, so do health insurance costs.
$ Prices are going up $ $ $ $ $ $ $ Way up! $ $ $ $ ◦ Doctors $ $ ◦ Hospitals $ $ $ ◦ Rx – including specialty drugs $ $ $
Constant Battle for Negotiating Power Mergers & Acquisitions Smaller Provider Networks Some providers won’t join networks Insurance Companies Health Care Providers
Some doctors won’t take insurance Hospital-based physicians Docs that won’t accept Marketplace plans Concierge Doctors / Direct Primary Care
Doctor Shortage The nation will be short more than 90,000 physicians by 2020 and 130,000 physicians by 2025, according to projections by the Association of American Medical Colleges. Source: http://www.beckershospitalreview.com/hospital-physician-relationships/8-physician-shortage-statistics.html
What is causing the doctor shortage? Shrinking Supply • 1 in 3 practicing physicians in the U.S. is over the age of 55 and close to retirement • 6 in 10 physicians say it is likely many colleagues will retire in the next one to three years Not enough growth • The number of Medicare-sponsored residency slots has been capped since 1997 • Medical school graduates may exceed the number of residency positions by 2015 Increasing demand • By age 65, about two-thirds of senior citizens have at least one chronic disease • 20 percent of Americans older than 65 see 14 or more physicians and average 40 physician visits each year • More than 10,000 Americans turn 65 each day • Some estimates project the Patient Protection and Affordable Care Act will extend health insurance coverage to 33 million citizens Source: http://www.beckershospitalreview.com/hospital-physician-relationships/8-physician-shortage-statistics.html
Prescription Costs This Morning: New government report found that ◦ 1 in 3 uninsured Americans ◦ 1 in 8 insured Americans cannot afford the price of their prescriptions
Specialty drugs or specialty pharmaceuticals are a recent designation of pharmaceuticals that are classified as high- cost, high complexity and/or high touch. What is a Specialty drugs are often biologics — "drugs derived from Specialty Drug? living cells" that are injectable or infused (although some are oral medications). They are used to treat complex or rare chronic conditions such as cancer, rheumatoid arthritis, hemophilia, H.I.V. psoriasis, inflammatory bowel disease and hepatitis C. In 1990 there were 10 specialty drugs on the market, in the mid-1990s there were fewer than 30, by 2008 there were 200, and by 2015 there were 300. Drugs are often defined as specialty because their price is much higher than that of non-specialty drugs.
Simpler Definition A drug that costs more than $600 per month.
Trends More Use of Cost is specialty specialty increasing drugs are drugs is at double- being increasing digit rates approved
Specialty Drugs – Soon 50% of Rx Spend Specialty drugs treat complex medical conditions and are especially costly. While only 1% of people require these drugs, they comprise about 33% of the cost of prescription benefit plans. These already burdensome costs are expected to rise to about 50% of total prescription drug costs over the next two to three years. All signs point to specialty drug costs continuing to rise over the next five years, with specialty medications being a major driver of cost in the marketplace for 2018 and for years to come. There’s a robust pipeline of specialty drugs, which are either in development or are about to get FDA approval. Expect more products to come to market that are dramatically more expensive as compared to non-specialty drugs. Source: https://www.truveris.com/resources/2018-specialty-drug-trends-employers
Price, Not Utilization, Driving Costs But while some of plan sponsors’ rising drug costs are attributable to greater utilization, the impact of increased pricing is more than four times as great. The same trend is evident for spending on hospitals and physicians, but to a much lesser degree (see chart). Source: http://ww2.cfo.com/health-benefits/2017/09/specialty-drug-costs-soar-2018/
Top Specialty Drug Categories • The report found that the cost of these drugs, which are commonly used to treat patients 1. Antineoplastic Drugs with cancer, will increase 4.96% in the next year. 2. Disease-Modifying Anti- • The authors said that DMARDs will be the largest driver of cost increases in 2018. This drug class is projected to skyrocket 11.95%. Due to the prevalence of DMARD use, this uptick in Rheumatic Drugs (DMARDs) costs may have a significant impact on overall spending. 3. Immunomodulatory • This class of drugs is used to treat patients with serious and debilitating conditions, such as Crohn’s disease and multiple sclerosis. The cost of immunomodulatory drugs is projected to Agents increase 8.93% in 2018, according to the study. • Although HCV antiviral drugs have driven a majority of specialty spending over the past few 4. Hepatitis C Virus (HCV) years, it may not be the case in 2018. The cost of these treatments is only projected to increase by 2.02%, likely due to the emergence of competitors and lower cost options. Source: https://www.specialtypharmacytimes.com/news/top-8-specialty-drug-categories-driving-spending-in-2018
Top Specialty Drug Categories • This drug class is only estimated to increase 3.94% in 2018, according to the 5. Immune Globulin study. 6. Hematopoietic • These treatments are often used to treat adverse effects from chemotherapy and other conditions, making them a crucial component of many regimens. Drugs Vizient reports that costs for hematopoietic drugs will rise 7.09% during 2018. • Notably, the cost of vaccines used to prevent pneumococcal disease and human 7. Vaccines papillomavirus are expected to increase 5.32%, according to the report. • With the growing prevalence of diabetes in the United States, access to 8. Diabetes treatment is crucial. Diabetes drug costs are projected to increase 3.62% in 2018. Source: https://www.specialtypharmacytimes.com/news/top-8-specialty-drug-categories-driving-spending-in-2018
Specialty Drug Pipeline Biosimilars will be an increasingly important part of the specialty pharmaceuticals market, and 2017 is set to be a banner year for new cancer biologics approval. Leading specialty therapy classes include inflammatory conditions, cancer, multiple sclerosis, HIV, and Hepatitis C. After a dip in specialty drug approvals by the FDA last year, 2017 is on track for 30 approvals — more than any previous year except 2015. Thirteen cancer drugs have already been approved this year and seven drugs for inflammatory diseases could be approved next year. Source: http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/specialty-drug-pipeline-predictions-seven-key-areas-watch
Biosimilar Pipeline Biosimilars are still a nascent field but with more than 70 biologic patent expirations by 2021, biosimilars are set to become an important part of the pharmaceuticals market. Resolution of regulatory ambiguities and maturation of the biosimilars market, as agents that the FDA deems to be interchangeable with their reference biologics lead to more competition, will yield cost savings. The biosimilar naming issue has yet to be resolved. The FDA released much-anticipated guidance for biosimilars naming in January, announcing that biosimilars will be named using reference biologics’ generic name plus a random four -letter suffix. Source: http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/specialty-drug-pipeline-predictions-seven-key-areas-watch
Specialty Drug Pipeline Source: http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/specialty-drug-pipeline-predictions-seven-key-areas-watch
Specialty Drug Pipeline Source: http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/specialty-drug-pipeline-predictions-seven-key-areas-watch
Specialty Drug Pipeline Source: http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/specialty-drug-pipeline-predictions-seven-key-areas-watch
Specialty Drug Pipeline Source: http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/specialty-drug-pipeline-predictions-seven-key-areas-watch
Specialty Drug Pipeline Source: http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/specialty-drug-pipeline-predictions-seven-key-areas-watch
“Affordable Care” Act Regulations Modified Adjusted Essential Benefits Community Rating
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