Happy Easter.

Members of Congress and Senators remain in their home districts / States for another week.

Last Friday, the Centers for Medicare and Medicare Services proposed to give hospitals a “total increase in inpatient operating prospective payments of 2.9 percent in fiscal year 2018,” which begins October 1, 2018.  CMS explains that

CMS is committed to transforming the health care delivery system – and the Medicare program – by putting a strong focus on patient-centered care, so providers can direct their time and resources to patients and improve outcomes. In addition to the payment and policy proposals, CMS is releasing a Request for Information to solicit ideas for regulatory, policy, practice and procedural changes to better achieve transparency, flexibility, program simplification and innovation. This will inform the discussion on future regulatory action related to inpatient and long-term hospitals.

Fresh approach.

Also last week, Drug Channels provided on outlook on specialty drug prices.  Drug Channels predicts that specialty drugs will represent 42% of the prescription drug market in 2021.

Here are [Drug Channels’] three key factors behind the projections: 

    Pharmacy industry revenues have been shifting from traditional brand-name drugs to specialty drugs. We estimate that in 2016, specialty drugs accounted for 28% of the pharmacy industry’s prescription dispensing revenues, up from 17% of revenues in 2011. This shift will continue, because the next-generation pharmaceutical blockbusters will primarily be specialty products aimed at smaller patient populations than were the mass-market blockbusters of yesteryear. Consequently, most of the industry’s best-selling drugs by revenue will be specialty drugs, not traditional drugs. 

    The generic wave is ending, which means that the growth rate of generic substitution will slow in coming years. Over the past five years, the generic dispensing rate (GDR)—the percentage of prescriptions dispensed with a generic drug instead of a branded drug—grew by 26 percentage points, from 63% in 2006 to 89% in 2016. We project that by 2021, GDR will have grown by only 3 percentage points, to 92%. 

    From 2009 to 2016, brand-name drugs with about $167 billion in retail sales faced generic competition. Annual brand sales facing generic competition averaged $21 billion annually. From 2016 to 2019, however, brand-name drugs with total sales of $19 billion will lose patent protection—an annual average of about $6 billion. Since generic drugs have much lower prices than do brand-name drugs, revenues from traditional drugs will grow slowly.