Ignagni: Provider Consolidation, Specialty Drug Prices Driving Unsustainable Health Care Costs

With health care costs continuing to rise for consumers and employers, AHIP President and CEO Karen Ignagni discussed two of the most important factors driving this trend—provider consolidation and specialty drugs prices—at the New York Times’ Health for Tomorrow conference. Below are excerpts of her remarks at the event. Watch the video below for footage from today’s session.

On provider consolidation: “There is a very stark gap between the rhetoric that goes into fueling the consolidation and the reality on the ground in terms of the resulting pricing.” “There is a very stark gap between the rhetoric that goes into fueling the consolidation and the reality on the ground in terms of the resulting pricing. And a very significant gap, they don’t match up, number one. Number two, we’re here in California. If you look at the health plans, the same health plans, the same benefit structures in Northern California, where you have a very highly consolidated market, [versus]  southern California, where there’s more competition in the provider community and provider market, you see a very significant what I would say ‘consolidation premium’ or ‘surcharge’ in the Northern California case driven by that consolidation.”

On $1,000 pill Sovaldi: “Is this ‘whatever you can get away with’ pricing here? In the case of Sovaldi, the Hepatitis C drug, … that’s really called into question.” “I do think that we have to take into consideration — is the United States subsidizing R&D across the globe? Is that the right thing for the future? Two, are the marketing and advertizing costs extraordinary? Is that the right thing for the future? Having more transparency on that and is this ‘whatever you can get away with’ pricing here? In the case of Sovaldi, the Hepatitis C drug, that’s really called into question.”

A growing body of evidence shows that the recent frenzy of mergers among providers has resulted in higher prices for consumers and employers and that this wave continues at a ferocious pace. An article in the New York Times said that while provider consolidation “could be a boon for the hospitals, hospital mergers often lead to higher prices for consumers, many studies have shown.” To learn more about how provider consolidation is making health care more expensive, visit the AHIP Coverage Blog.

Sovaldi, which has been touted as a “canary in the coal mine of drug policy,” is priced so irresponsibly high that, according to Kaiser Health News, “If all 3 million people estimated to be infected with the virus in America [were] treated at an average cost of $100,000 each, the amount the U.S. spends on prescription drugs would double, from about $300 billion in one year to more than $600 billion.” That’s why so many are concerned about the skyrocketing price of specialty pharmaceuticals in America. And now, with the indefensibly-priced drug Sovaldi breaking sales records, this scary trend is garnering more and more attention. Learn more about challenges posed by high specialty drug pricing here.

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