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Finding a Solution to Rising Health-Care Costs

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State Senator Don White of Indiana County is the majority chairman of the Pennsylvania Senate Banking and Insurance Committee.

Ask business owners what keeps them up at night and many will tell you it’s the uncontrollable cost of health care. Rising health-care costs can be devastating to companies, taking money away from hiring, salaries and investments to drive growth.

This is not only a problem for business owners; it impacts all Pennsylvanians. It can result in higher taxes to pay for increased Medicaid costs, meaning less money for private and public investments. As a policymaker, I’m interested in understanding what’s driving up the costs of health care and working to find a solution.

I have found that one of the leading cost drivers is the rapidly rising price of many prescription drugs. In 2014, prescription drug spending in the United States increased by more than 13 percent, according to a report by Express Scripts. That increase is largely attributed to a 30-percent rise in specialty drug spending.

Specialty drugs are complex medicines that often represent breakthrough treatments. However, they come with higher
prices than older drugs. Specialty drugs, such as Sovaldi, a new hepatitis C medication, cost $1,000 per pill and $84,000 for a 12-week treatment.

John Rother, president of the National Coalition on Health Care, said if the estimated 3.2 million Americans infected with hepatitis C took Sovaldi at its current price, the total cost would top $268 billion. He explained that when you add the cost of other drugs prescribed with Sovaldi, the total is well in excess of $300 billion — more than what we spent on every other brand name prescription drug in 2013 combined.

The problem is getting worse.

The Pittsburgh Post-Gazette reports that the estimated number of Americans whose medication costs reached $50,000 increased by 63 percent over the previous year. The number of Americans whose yearly medication costs reached at least $100,000 nearly doubled the previous year’s number.

The specialty drug market is expected to quadruple, going from an estimated $100 billion in revenues last year to $400 billion by 2020.

If something is not done to control these costs, everyone will be paying more in insurance premiums and taxes.

The question I’m asking is: Why do these drugs cost so much?

To help find the answer, I have introduced transparency legislation in the Pennsylvania Senate that asks drug companies to tell us how they arrive at their price for these drugs.

My legislation asks the companies to tell us how much they spend on research and development, clinical trials and manufacturing, as well as marketing and advertising costs.

I believe the first step is to require more transparency regarding drug prices. I have seen plenty of evidence that suggests big pharmaceutical companies arbitrarily price their drugs and place an incredible and unjustified financial burden on patients.

This approach, which has bipartisan support, will truly help vulnerable patients by giving them affordable access to essential, life-saving medications.

I recognize that drug manufacturers are large employers in Pennsylvania, and I applaud the positive economic impact they have made. However, rising health-care costs, including increasing drug costs, are affecting all employers statewide.

I am a proud champion of our free-market system. I believe that drug companies should be rewarded for creating advanced treatments, but not at the cost of threatening to bankrupt our entire health-care system while endangering jobs all across Pennsylvania.

To learn more about Senator White’s legislation, Senate Bill 893, visit www.senatordonwhite.com.