Tag: "drugs"

CPI: Medical Inflation Finally Under Control

BLSThe Consumer Price Index (CPI) for April confirmed medical inflation is matching the broad measure of price changes. For the second month, price changes for medical care (0.3 percent) were in line with all-items (0.4 percent). Although, it looks like a jump in energy prices drove the CPI up. If energy price increases moderate, we can expect prices for medical care to increase faster than CPI.

With respect to medical commodities, it prices of prescription drugs continued to increase faster than other medical commodities or commodities over all. Although, pharmaceutical price hikes in the CPI are not as big as in the Producer Price Index. Prices for many health goods and services actually dropped.

However, over the last twelve months, medical prices faced by consumers have grown much faster than non-health prices: 3.0 percent versus 1. percent. Prescription prices increased 4.0 percent, as did prices for inpatient hospital services. Health insurance increased 5.8 percent.

(See Table I below the fold.)

PPI: Pharma Price Hikes Continue To Stand Out

BLSThe Producer Price Index (PPI) for final demand goods grew 0.2 percent last month, or 0.3 percent less food and energy. Prices for pharmaceutical preparations and most medical devices grew significantly faster, at 1.0 percent and 0.5 percent, although prices for X-Ray and similar equipment were flat.

With respect to final demand services, for which prices rose 0.1 percent (or 0.3 percent, less trade, transportation, and warehousing), prices of medical services changed similarly. However, prices for health insurance jumped 0.8 percent.

With respect to goods for intermediate demand, which dropped 0.3 percent, price increases for biologics, including diagnostics, stood out at 2.5 percent. With respect to services for intermediate demand, which rose 0.1 percent, prices for health insurance jumped 0.8 percent

Looking back over the 12-month period, the price increase of 10.4 percent for pharmaceutical preparations continues to stand out like a sore thumb. Political agitation against drug prices is unlikely to go away soon. Health insurance, having risen 1.7 percent in a flat or negative inflationary environment, is also beginning to stand out. (See Table I below the fold.)

Strong Opposition to Change in Part B Drug Reimbursements

The Center for Medicare and Medicaid Services (CMS) recently proposed a pilot project to test alternative payment methods for drugs under Medicare Part B. These are the drugs administered in hospital outpatient clinics and physicians’ offices.

Are Prescription Drug Prices Becoming As Meaningless As Hospital Charges?

Professor Jack Hoadley of Georgetown University recently gave an excellent presentation discussing prices of prescription drugs. Two slides stand out. First, a slide showing how much prescription spending is controlled by insurers and governments versus patients directly:

20160415 Rx Prices

As recently as 1990, patients controlled over half of drug spending. Today, it is under 20 percent. Has this cost shift made drugs more “affordable”? Obviously not: 8 percent of patients do not take medicines as prescribed, because of cost. Hillary Clinton promises to impose government price controls on drugs if she becomes president.

CPI: Most Medical Price Hikes Stall

BLSThe Consumer Price Index for March indicates that medical price inflation matched changes in other prices charged to consumers, with a slight uptick of 0.1 percent. Prescription drugs (0.5 percent increase), nursing homes and adult day care, eyeglasses, and health insurance (all with 0.4 percent increases) stood out as continuing to experience higher inflation than other items. Prices for many health goods and services actually dropped.

However, over the last twelve months, medical prices faced by consumers have grown much faster than non-health prices: 3.3 percent versus 0.6 percent. Prescription prices increased 3.4 percent. However, inpatient hospital services and health insurance prices increased much faster, by 5.9 percent and 6.0 percent.

When we compare the medical components of the CPI with those in the Producer Price Index, it appears that hospitals, not drug makers, are shifting more prices directly onto consumers.

(See Table I Below the fold.)

PPI: Pharmaceutical Prices Up Amid Deflation

BLSDeflation in the Producer Price Index (PPI) continued last month, as the PPI for final demand dropped 0.1 percent from February. Prices for final demand goods, less volatile food and energy, increased 0.2 percent. Most prices for health goods for final demand were flat. The exception – again – was pharmaceutical preparations, for which prices increased 0.4 percent.

With respect to final demand services, for which prices dropped 0.2 percent (or increased just 0.1 percent, less trade, transportation, and warehousing), prices of medical services changed little. Even the price of health insurance remained flat, after an increase in February.

With respect to goods for intermediate demand, prices for chemicals (which go into pharmaceutical preparations) increased by just 0.1 percent, while prices of biologic products (including diagnostics) dropped the same percentage. With respect to services for intermediate demand, prices for health insurance remained flat, although prices for other intermediate services declined.

Looking back over the 12-month period, the price increase of 9.8 percent in pharmaceutical preparations continues to stand out like a sore thumb. Political agitation against drug prices is unlikely to go away soon. (See Table I below the fold.)

CPI: Health Insurance Premiums Jump Amid General Deflation

BLSThis morning’s Consumer Price Index corroborates yesterday’s Producer Price Index, which indicated health insurance and certain other health prices increased in a generally deflationary environment. While the CPI for all items dropped 0.2 percent in February, health insurance increased 1.3 percent. Over the last twelve months, CPI has increased just 1.0 percent, while health insurance has increased 6.0 percent.

Prescription drugs continue to stand out, as well, having increased 0.9 percent last month and 3.4 percent over twelve months. However, the increase in prescription prices alone cannot explain the health insurance premium hikes.

Inpatient hospitals services also stand out, having increased 0.6 percent last month and 4.8 percent in the last twelve months. Outpatient services are only slightly better.

February’s CPI confirms that, while nominal increases in health prices are moderate, real price increases are quite high, because we are in a generally deflationary environment.

(See Table I below the fold.)

Donald Trump on Drugs

Trump(A version of this Health Alert was published by Forbes.)

In last Thursday’s Republican presidential primary debate in Florida, Donald Trump made the curious assertion that Medicare does not “bid out” prescription drugs, before moving on to a similar assertion about military procurement. As with all thing related to whatever “Trumpcare” would look like if he were President, this statement requires some effort to decipher.

Medicare’s prescription drugs are very well “bid out.” Indeed, they are “bid out” twice – both directly and indirectly. Doctors and hospitals are not “bid out” at all. Instead, they are subject to Soviet-style price fixing by a central government authority. This is changing quickly, but the alternative payment methods are at a very early and unproven stage. Further, these alternative payment methods are not subject to competitive bidding, but to quality measures dictated by the central government (as I described last week).

Medicare spending on durable medical equipment (for example, walkers or oxygen equipment), prosthetics, and other supplies (for example, diabetic test strips) has been competitively bid since 2011. However, those competitive bids are delivered to the central government. Medicare prescription drugs are doubly bid, because drug-makers do not negotiate prices with the central government. Instead, health insurers compete to provide Medicare Part D drug plans, and the winning insurers negotiate with drug-makers for medicines. Consumers of prescription drugs enjoy two levels of protection from political interference.

PPI: Health Insurance Jumps, Deflation Returns

BLSDeflation returned to the Producer Price Index (PPI) last month, as the PPI for final demand dropped 0.2 percent from January. Prices for final demand goods, less volatile food and energy, increased 0.1 percent. Most prices for health goods for final demand were flat. The exception – again – was pharmaceutical preparations, for which prices increased 1.2 percent.

With respect to final demand services, for which inflation was flat (or up 0.3 percent less trade, transportation, and warehousing), the increase in the price of health insurance stands out at 0.9 percent. This is the first jump in health insurance for a while. (Home health prices also increased 1 percent, but such increases have been common.)

With respect to goods for intermediate demand, prices for chemicals (which go into pharmaceutical preparations) decreased, but not by nearly as much as prices for other intermediate goods declined. With respect to services for intermediate demand, prices for health insurance increased by 0.9 percent, significantly more than prices for other intermediate services.

Looking back over the 12-month period, the price increase of 10.1 percent in pharmaceutical preparations continues to stand out like a sore thumb. However prices for services delivered in residential settings have also increased more than other services.

What is new for February is the increase in health insurance. Increasing health costs are finally being passed on through premiums. (See Table I below the fold.)

Ten Percent of Cancer Drug Spending Wasted

BMJA remarkable study published in the BMJ concludes that $1.8 billion of the $18 billion spent on the 20 most expensive cancer drugs in the U.S. is wasted due to cunning marketing by drug-makers. Chemotherapeutic doses are often adjusted by body weight. However, the drugs are shipped in vials containing doses appropriate to bigger people. Once opened, the drug that remains after an oncologist selects the does appropriate for a smaller or average-sized person has to be discarded.

vaccine-shot

The authors allege the drug-makers do this deliberately, to increase profits. Their proposed solution is that the Food and Drug Administration should regulate the size of vials!

There is a better way.

First, the FDA is not concerned with the cost of medicines. The proposed solution has nothing to do with safety or efficacy, so is not within the FDA’s purview.