Are Medical Care Prices Still Declining? A Re‐Examination Based on Cost‐Effectiveness Studies

Dunn, Abe; Hall, Anne; Dauda, Seidu

doi:10.3982/ecta17635

Cited by 7 publications

(3 citation statements)

References 55 publications

(82 reference statements)

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“… 23 Several quality advancements were observed during the past decade for patients with HCV, including increases in the sustained virologic response (ie, clinical cure) rate, fewer adverse effects, and lower pill burdens. Dunn and colleagues 24 and Cutler and colleagues 25 have both proposed utility-based quality adjustments for assessing drug price inflation that could be combined with our class-based, prescription-adjusted approach. However, this is a separate topic requiring a separate analysis.…”

Section: Discussionmentioning

confidence: 99%

Comparison of Price Index Methods and Drug Price Inflation Estimates for Hepatitis C Virus Medications

2023

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ImportanceMeasuring drug price inflation is challenging because new drugs continually enter the market, some drugs transition from branded to generic, and current inflation indexes do not account for these market basket changes. Instead, they measure the price increases after new drugs have been launched. Therefore, the public pays the higher costs of newer and usually more expensive drugs, but the inflation indexes do not reflect the increases over existing drugs previously used to treat the same conditions.ObjectiveTo assess how price index methods can affect estimates of drug price inflation using a case study of hepatitis C virus (HCV) medication and to explore other approaches for constructing a price index.Design, Setting, and ParticipantsThis cross-sectional study used data from outpatient pharmacies to compile a list of all HCV medications that were ever on the market (brand and generic) from 2013 to 2020. Using National Drug Codes of HCV drugs, a 20% nationally representative sample of Medicare Part D claims from 2013 to 2020 was queried. Alternative drug price indexes, including product-level vs class-level product and quantity definitions were developed in which gross vs net price definitions were used and an adjustment was created and applied to capture treatment duration because newer drugs often required a shorter duration.Main Outcomes and MeasuresPrice index value and rate of inflation from 2013 to 2020 for each methodologic approach to constructing a drug pricing index.ResultsIn all, 27 different HCV drug regimens were identified in Medicare Part D claims in 2013 to 2020. A product-level approach for measuring inflation estimated a 10% gross drug price increase from 2013 to 2020 for HCV drugs, whereas a class-level approach including the higher prices of the new drugs showed a 31% gross price increase. After adjusting for manufacturer rebates to estimate net prices, the findings showed that HCV drug prices fell by 31% from 2013 to 2020.Conclusions and RelevanceThe findings of this cross-sectional study indicate that the current product-level methods to estimate drug price inflation underestimated price increases for HCV drugs by failing to include the high launch prices of new market entrants. Using a class-level approach, the index captured higher spending on new products at launch. Prescription-level analyses, which did not consider shorter durations of treatment, overestimated price increases.

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Section: Discussionmentioning

confidence: 99%

Comparison of Price Index Methods and Drug Price Inflation Estimates for Hepatitis C Virus Medications

2023

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“…This trend is consistent with the finding that recent increases in medical care costs seem to have disproportionately affected patients with high-cost and chronic conditions. 17 Overall, the high rate of increase for stop-loss premiums, driven by above-average increases in growth in the cost of large claims, is obviously of concern to all employers regardless of size. However, there is no evidence that this trend has, as yet, led to less demand for stop-loss coverage.…”

Section: What Is the Future Of Small Employer Coverage Of High-cost T...mentioning

confidence: 99%

Is employment group insurance financing of expensive gene therapies threatened in the United States?

Doshi,

Eilers,

Gupta

et al. 2023

Health Affairs Scholar

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Despite the potential of gene therapy to transform the lives of patients with rare genetic diseases, serious concern has been raised about the financing of the high up-front costs for such treatments, and about the ability of the employer sponsored insurance system in the U.S., particularly in small firms, to pay for discoveries of this type. In this paper, we provide a conceptual framework and empirical evidence to support the proposition that, at present, private group insurance financing of cost-effective gene therapies is not only feasible and competitively necessary in the labor market for employers regardless of group size, but also that currently the number of U.S. workers in small firms who might be stressed by very high-priced claims is a tiny fraction of the group market for genetic treatments. The current system of employer-paid self-insurance supplemented by stop-loss coverage should be able to facilitate the use of new cost-effective gene therapies. Other alternative methods of financing that have been proposed may not be urgently needed. There are, however, some concerns about the long-term resilience of this system if stoploss premiums continue to have high growth.

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“…5.From an entirely different vantage point, when health care prices in the United States are adjusted for the quality of services rendered actually declined 1.33% per year from 2000 to 2017 (Dunn et al, 2022). …”

mentioning

confidence: 99%

The clear expectation of cultural betterment in the face of rising living standards

Murphy

2023

Rationality and Society

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Rising Real Gross Domestic Product Per Capita data indicates rises in living standards. Nonetheless, cultural pessimism is the received view. This paper makes a series of arguments that we should expect our cultural products (e.g. art or cuisine) to be on an upwards trajectory, just as RGDP per capita is. To do so, I expand on Bill James’s “Peripheral Quality Indicia” in order to argue that analogous indicators for our cultural products strongly suggest that they have improved. I also claim that RGDP per capita is itself a peripheral quality indicium for essentially any good in the economy. I then sketch the conditions under which cultural products are actually lower in quality today than they were in previous periods in order to demonstrate the general unlikelihood of quality declining.

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Are Medical Care Prices Still Declining? A Re‐Examination Based on Cost‐Effectiveness Studies

Cited by 7 publications

References 55 publications

Comparison of Price Index Methods and Drug Price Inflation Estimates for Hepatitis C Virus Medications

Comparison of Price Index Methods and Drug Price Inflation Estimates for Hepatitis C Virus Medications

Is employment group insurance financing of expensive gene therapies threatened in the United States?

The clear expectation of cultural betterment in the face of rising living standards

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