September 30, 2014

Specialty Drugs Could Strain Health Care Budgets

  • The American health care system is a patchwork of public and private programs that serve citizens in different ways, depending on their age, military...

A new prescription drug has the potential to upend the nation’s health care system and dramatically increase costs for federal health care programs and state budgets.

The drug, called Sovaldi, is a highly effective treatment for Hepatitis C -- an infectious disease that is the most common blood-borne illness in the country, afflicting more than 3 million individuals. But the drug’s price is $1,000 per pill and the treatment is normally given for 12 weeks, making the cost at least $84,000 and often substantially higher.

The National Coalition on Health Care, which has undertaken a “Campaign for Sustainable Rx Pricing,” estimates that the cost to treat every infected individual would exceed the annual spending on all other prescription drugs combined.

Even if only a part of the infected population were treated, it would dramatically increase insurance premiums, widen the gap in Medicare’s finances, and severely damage state budgets due to the stress that the drug costs would place on an already cash-strapped Medicaid system.

Sovaldi is seen as just the leading edge of a new class of designer drugs whose manufacturers will have nearly unrestrained pricing power in our current prescription drug market. Developing a new way to encourage innovation within a sustainable health care system will be crucial for the nation’s finances. We do not have a lot of time before something must change.