Specialty drugs, generics drive increasing Medicaid pharmacy costs, make budgeting difficult

Markets Associated Press

The high cost of a drug used to treat Medicaid patients with hepatitis C drew scrutiny from lawmakers earlier this year, but other drugs are also driving up the state's costs and likely will continue to do so for several years, government data reveals.

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From fiscal year 2010 through 2014, drug costs for Missouri's Medicaid program rose 33 percent, to $1.16 billion. Meanwhile, the number of claims fell slightly, by less than one-tenth of one percent, according to Missouri Department of Social Services data provided to The Associated Press.

The unpredictability of new specialty drugs coming onto the market and the rising cost of even generic medications will make budgeting for the state's pharmacy costs within the Medicaid program increasingly difficult in the coming years, said Joe Parks, director of the state's Medicaid program, MO HealthNet.

Expensive new drugs that hit the market will keep pushing the state's pharmacy program costs higher, he said.

"Each one's an individual special problem, and there's more of them coming down the pipeline all the time," Parks said during a recent legislative hearing.

A supplemental budget measure that includes an additional $92 million in general revenue for the state's Medicaid pharmacy program currently is awaiting another vote in the House. About $27 million of that is due to increased cost projections, which officials have said are driven by the high cost of a new hepatitis C medication.

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Lawmakers balked at the price tag of the hepatitis C drug when Gov. Jay Nixon first made his supplemental budget request. Missouri's Medicaid program provided Gilead Sciences' Sovaldi — which treats the liver disease and is more effective with fewer side effects than earlier medications — to 311 patients at a cost of $26 million in the fiscal year that ended June 30, 2014.

The Department of Social Services in January announced that it negotiated a lower cost and rebate for a newly introduced competitor to Sovaldi, AbbVie's Viekera Pak, which would be the preferred drug to treat the liver disease. The department estimated the change would save the state about $4.2 million in projected costs.

But the hepatitis drugs aren't the only costly ones in Missouri's Medicaid program.

"Is it bad luck everything keeps going up this dramatically? Is there ever a cap to this?" asked House Budget Committee Chairman Tom Flanigan, R-Carthage. "Are we going to come back next year and look at $200 million? Is there a level out?"

Parks replied: "There is no cap and I expect it will keep going up. This country has decided as public policy to manage its pharmacy prices on an open market model."

The most expensive drug by total cost in the state's Medicaid program is Abilify, distributed by Bristol-Myers Squibb Company, which was first approved by the U.S. Food and Drug Administration to treat schizophrenia in 2002. About 15,000 Medicaid recipients were prescribed Abilify at a total cost of more than $75 million in fiscal year 2014.

The Medicaid program's most expensive pharmaceutical treatment on a per-person basis in the top 25 most expensive for the program overall was a blood clotting prescription that replaces a critical protein for people with hemophilia. The per-patient cost ranged from $186,000 to $264,000, according to DSS data.

Dan Phelps, 31, uses the prescription as needed, taking it when he gets cut, bumps his knee or gets hit in the stomach by his young son. Phelps has hemophilia and was also diagnosed with ulcerative colitis, a chronic inflammatory bowel disease, in November 2012. Because of the amount of work he missed due to severe flare-ups of the ulcerative colitis, his hours at Target, where he had worked since he was 17, were cut back and he lost his health insurance.

Phelps now is covered by Missouri's Medicaid program.

"There's times that it's kind of hard and there's times my doctor has to kind of throw a fit, but as long as he's on my side, I tend to get the medication that I need," Phelps said.