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Value for money: Is this the wrong way to manage drug costs?

Value for money: Is this the wrong way to manage drug costs?

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Drugs. We spend a lot of time talking about them. We spend a lot of money paying for them. They account for the biggest portion of the health plan costs for most of the plans I work on and insurer statistics indicate that is the case across the industry.

In an effort to manage drug spending, over the last couple of years, insurers have launched a value-based component to their drug formularies. As a brief explanation, this means that insurers are reserving the right to determine if a new drug’s improvement in treatment is worth the price, before extending coverage for it under their drug plans. Is it possible this is the wrong approach?

In general, people tend to look for the easy fix.

Most of us would rather take a pill than get a shot or undergo a longer therapy or wait for a virus to run its course. This pressure from patients – as well as from their medical colleagues – may have led to doctors over-prescribing.

Green Shield Canada’s latest podcast, Now for Something Completely Indifferent includes an enlightening interview with Dr. Danielle Martin. You may remember her as the articulate poster child for Canada’s medical system or as the author of Better Now: Six Big Ideas To Improve Healthcare for All Canadians. In this interview, Dr. Martin suggests we are taking more drugs than we actually need. Doctors want to help, so they order tests and prescribe drugs, drugs that may not improve our health. (For instance,  JAMA released a study that indicates two-thirds of the seniors in Ontario taking B-12 shots are not actually B-12 deficient. They estimate the province has spent over $45 million on unnecessary shots each year.)

The statistics are surprising.

In another headline that caught my eye, cancer drug expenditures in the United States have increased by almost 60% since 2013. In that same period, according to Robin Feldman, author of Drugs, Money & Secret Handshakes: The Unstoppable Growth of Prescription Drug Prices, the number of cancer drugs in late-stage trials increased more than 60%. Meanwhile, the overall death rate from cancer has decreased only about 5% since 1950 and the cancer drugs approved between 2003 and 2013 increased overall survival by an average of only 3 to 4 months. These statistics are surprising, but Feldman’s article in the Washington Post is a revelation of how Orphan Drug legislation has incentivized drug manufacturers to focus on drugs for the treatment rare cancers, rather than a cure for more common cancers. (Manufacturers can “dominate the market on certain drugs without investing nearly as much…as it would take to create all-new medicines.”)

We need a “sustainability” perspective.

It seems like the discussion about the cost of drugs will continue well into the future. As Canada heads into a federal election with a national pharmacare plan on the table, we can expect to hear a lot about high-cost drugs. We need to get some perspective to ensure the sustainability of a national plan in the same way we need perspective to manage the sustainability of employer plans. While I hope I never have to make a choice of this nature, we have to look for treatment that extends life—and quality of life—for a duration that reflects the cost of the treatment.

And we need to focus on the management of the majority of drugs, those drugs we take for chronic conditions. Many of these conditions can be managed with less costly generics, which is a simple intervention. And we should never underestimate the value of non-drug interventions, like not smoking, choosing to eat more fruits and vegetables, and staying active. While not the cure-all, healthy choices can help stave off disease and limit drug interventions.

While insurance companies continue to pit treatment costs against their effectiveness, and employers struggle to provide meaningful coverage for their employees, doesn’t it really come down to you and me making the most informed choices we can?

Stay healthy!