Karen Ignagni Describes How to Manage Rising Drug Costs

Encouraging the use of generics is only one of the ways to manage the rising costs of medications, according to Karen Ignagni, president and CEO of EmblemHealth. Data and system transparency will also help both the patients and the payers better understand this growing trend.

Transcript (slightly modified)

How has EmblemHealth been helping its customers manage the rising cost of drugs?

This is a very important issue, I’m glad you’re raising it. The rising cost of drugs—probably the most challenging policy issue in the healthcare arena today. And the reason for that is that in many situations where we have very high costs being propelled by companies that are single-source companies for those drugs. So we have a monopoly and we’re negotiating against a monopoly and it’s very hard to negotiate against a monopoly.

So the question is, what do you do? We try to create formulary structures that encourage the use of generics, although we’ve seen those costs exploding recently. We’ve seen the cost of the regular drugs that most of the population is using explode, lately. But we try to create formularies that encourage the access providing individuals a pathway to address their needs, giving them choice and letting them make choices. And, having a series of structures around them that support that with information, with transparency, and making sure that in the end, they feel that they are well supported and have their medical needs met on the pharmaceutical side.

But this whole issue of what drug for what condition—how do you look at a drug to drug, a drug to a therapy to another type of procedure or a device, for example? We really have very little data that is objectively produced and in the public domain. We need access data, we need efficiency data, we need quality performance data, and we need cost data. And we can’t run from that because individuals themselves, their households, are spending a significant amount of money in this area. Employers are spending a significant amount of money, as are states and the federal government. So we need to have better data, number 1.

We need more transparency. How much is being allocated for R&D versus profits that are at the 40% and 50% level or even higher in the case of the hepatitis drugs. That’s something the American people have a right to know. And I think that that provides transparency in the public arena so that we can have the kind of informed conversation that we need to have as Americans in this arena.

So we’re hoping that we will continue to be able to partner with pharmaceutical companies on value-based strategies but at the same time, we can’t ignore the exploding costs. And the American people, obviously, are not ignoring the exploding costs.