Cancer Drug Price Increases Cost Medicaid Millions in Extra Spending, Analysis Shows

An analysis by Kaiser Health News shows that Medicaid incurred billions of dollars in extra spending as a result of price increases for hundreds of common drugs from 2015 to 2016, including decades-old branded drugs and generics used to treat cancer.

The report, published Monday, lists 313 brand-name drugs and 67 generics that have had their prices raised in 2016, leading to a total of nearly $3.5 billion more in Medicaid spending compared with 2015. While generics are expected to drop in price over time, the price per unit for dozens of these drugs increased by 2- or 3-fold in 2016.

For instance, potassium phosphates have been used since the 1980s to treat low phosphate levels, including in patients receiving chemotherapy, but their cost to Medicaid is now $6.70 per unit, an increase of 290%. This price hike, which the report states is the result of a shortage that began with a manufacturing facility closure, cost Medicaid an extra $1.8 million in 2016.

Other cancer therapies on the list include temozolomide, an authorized generic oral chemotherapy drug, which was responsible for $2.2 million more in Medicaid spending in 2016. Unsurprisingly, branded drugs had more significant price increases than generics. For instance, the price increase of Neulasta, a brand-name biologic used to treat chemotherapy-associated neutropenia, resulted in $14.6 million in additional 2016 expenditures for Medicaid.

Medicaid’s enrollment total of nearly 69 million beneficiaries means that even small price increases can have large impacts. The painkiller naproxen sodium, sold over the counter as Aleve, saw its price per pill increase from $0.72 to $1.70, which translated into $10.7 million in additional Medicaid spending.

The report points out that generic status and length of time on market do not insulate drugs from price increases, especially if there are few or no comparable generic competitors available. The FDA has noted this occurrence and has recently stepped up its emphasis on generic drugs as an area where competition and innovation could help bring down prices.

“Too many patients are being priced out of the medicines they need,” said FDA Commissioner Scott Gottlieb, MD, in a June blog post where he announced the development of the agency’s Drug Competition Action Plan and called out the ways that brand-name manufacturers game the regulatory system to block generic development.

The Action Plan outlined shortly thereafter seeks to encourage innovation by allowing an expedited review process for generic products with few or no competitors. The FDA also published a list of drug products without generics that have no patent barriers, as a guideline for manufacturers looking to produce a generic that would receive the new accelerated review.

This list includes several oncology drugs, such as chemotherapy agents carmustine, lomustine, and teniposide. Another drug on the list, nabilone, is used to treat chemotherapy-induced nausea and vomiting.

The FDA’s announcement regarding the Action Plan said it had been “based on data that indicate that consumers see significant price reductions when there are multiple FDA-approved generics available.” As the Kaiser Health News report indicates, increased generic competition could also potentially alleviate the burden on the Medicaid program and taxpayers if it does result in lower drug prices.