After 190 failed tries…

Why are pharmaceuticals so expensive?  One reasons is that there is a lot of research that goes into developing a drug.  Most of that research results in drugs that don’t work.  One example is the search for Alzheimer’s treatment.  As Bloomberg reports: Drug companies have long focused on a different protein called amyloid that clumps in…

ICER and drug prices

The Institute for Clinical and Economic Research aims to measure the value of drugs and aims to reduce the price of treatments that they deem to be low-value.  Is this simply an academic exercises, or are payers paying attention?  An article in CNBC sheds some light on the topic: Asked about that analysis, Miller said: “We…

Medicaid Managed Care and Drug Utilization for Patients with Serious Mental Illness

How will Medicaid expansions affect patient access to pharamceuticals? This question is particularly relevant for patients with serious mental illness. The answer is complicated by the increasing presence of Medicaid managed care plans. Increasingly, states have turned to contracts with Medicaid managed care plans in order to better control costs and reduce budgetary uncertainty. However, in…

Part B drug reimbursement

In the past Medicare has reimbursed physicians that administer Part B drugs–typically injectable medications administered in a physician’s office–at 6% of the drug’s cost.  The 6% aims to cover the cost of purchasing and storing the drug as well as administering it.  Because physician reimbursement is proportional to the cost of the drug, physicians have…

Orphan Drugs

How can policymakers incentivize innovators to invest in new treatments for rare diseases? One solution policymakers invoked was enacting the Orphan Drug Act of 1983 which provided a number of benefits–including lower tax rates–for innovators who created drugs to treat rare diseases. Was it effective? According to a paper by Miller and Lanthier (2016), the…

Off label prescribing: Q&A

The Duke-Margolis Center for Health Policy has a great overview of some of the issues related to off-label prescribing.  Below is a summary of some key points from this article. What is off-label prescribing? Off-label prescribing and use can take many forms, such as use of an approved drug for an unapproved clinical indication, use at…

Can reducing cost sharing save money?

Typically, economists believe that subsidizing goods or services increases utilization and the total amount of funds spent on a good. The RAND Health Insurance Experiment (HIE) proved that lowering cost sharing increases total spending on medical goods. Although reducing cost sharing on all medical care is likely to increase total healthcare spending, subsidizing highly effective therapies can actually…