This September, Florida’s top economist Amy Baker stood in front of the state’s Joint Legislative Budget Commission in Tallahassee and presented an economic forecast for the next few years. General revenue is expected to go up — but so is the cost of health care.
“Medicaid is by far and away our largest driver in this year’s long-range financial outlook,” Baker told lawmakers.
According to Baker, Florida’s contribution to Medicaid will take up more than 37 percent of the budget.
There are a lot of reasons for this, but she told legislators the big one is the cost of special new drugs for hard-to-treat illnesses: “Hepatitis C, cystic fibrosis, other things — and they’re extremely costly medications and so those pharmaceutical costs are a very significant player.”
As the rising cost of health care strains Florida’s budget, expensive new drugs are challenging cost projections.
According to a brief from an industry group, America’s Health Insurance Plans, these special medications account for one percent of all prescriptions and about a third of all drug spending.
“It’s incredibly challenging to try to predict, or pull that crystal ball up, and discern what it is we need to budget for or how we need to negotiate rates,” says David Poole, director of legislative affairs for the AIDS Healthcare Foundation, which runs a Medicaid health plan.
He points out, some of these specialty drugs are so new, nobody knows how to budget for them.
Take the example of Sovaldi. It’s one of the new drugs that can cure Hepatitis C. And in 2014, within months of FDA approval, Florida had spent more than 11 million dollars on Sovaldi to treat a few hundred Medicaid patients. That’s a lot less than liver transplants would cost for all those people, and the state has since developed a threshold for how sick patients must be before they can get the drug, but it still upended prescription budgets for Florida’s Medicaid plans.
“This is happening more and more often where new drugs are brought to market, and they are standard of care, and we at AHF and other health plans want to do right by our patients or our beneficiaries,” says Poole. “We often don’t have any idea what the price point will be.”
“The policies around how Medicaid prescription drugs are handled by Florida needs a lot of therapy — Florida should not be bottom 10 in the nation,” says Joel Menges, CEO of the Menges Group which does Medicaid and Medicare consulting.
Menges says Florida has one of the highest average costs per prescription in the country — partly because the state limits how the Medicaid plans can control their prescription guidelines.
Many of the insurance companies offering Medicaid plans in Florida have lost money since the state moved to a managed care model.
The Florida Association of Health Plans commissioned an analysis of prescription spending. And in a letter to the state, the association outlined how costs went up by more than 22 percent when insurers had to start using the state’s prescription drug guidelines.
“The cost of prescription drugs was the top thing that the public really wants policymakers to be focusing on,” says Bianca DiJulio, who does health care policy opinion research with the Kaiser Family Foundation.
DiJulio says even when consumers feel like they can afford their own medications, they think drug costs are too high.
And as of right now, it’s a bipartisan issue: democrats and republicans ranked it as the number one priority in health care.
Sammy Mack is a reporter for WLRN in South Florida. WLRN is part of Health News Florida, which receives support from the Corporation for Public Broadcasting.
