CEO Live Interview on High Drug Costs

ACHP and our members realize the importance of responding to the rising cost of prescription drugs. On October 16, more than 200 attendees tuned in for our live interview, High Cost Drugs: A CEO’s Perspective. Chief Executive Officers Patricia R. Richards of SelectHealth and John Bennett, M.D., of Capital District Physicians’ Health Plan (CDPHP), in a conversation moderated by Robert Wood Johnson Foundation Senior Policy Adviser Susan Dentzer, discussed the impetus and consequences of rising drug costs and fielded questions from listeners.

Both panelists were adamant that rising drug costs are not sustainable. With prescription drug costs now commanding 15-20 percent of health care spending in many ACHP plans, rising drug prices are already having an impact on insurance premiums, cost-sharing arrangements and patients’ compliance with drug regimens. The repercussions echo nationwide. The impact is rippling outward from patient, employer and insurer to state and federal health care programs, and, if left unabated, will eventually compromise funding for other government services.

Pat Richards shared the example of a large employer group of about 600 employees covered by SelectHealth, which realized that, within a year, its prescription drug spending had increased from around $500,000 to $750,000. Working together, SelectHealth and the employer discovered that the spending jump was caused by one member—and an increase in the cost of one medication. The employer reconsidered offering prescription drug coverage altogether. (In the end, the employer did continue offering prescription drug coverage.)

Both Richards and Bennett agreed that in order to reduce drug costs, transparency across health care systems, including physician, hospital and pharmaceutical costs, is vital. Transparency means that accurate information on the cost of developing, acquiring and marketing drugs is easily accessible to consumers and health care personnel alike. This type of information would be requested for specialty drugs, as well as for drugs that are established in the market for years, some of which are now increasing in price significantly. Transparency also means being able to compare health care costs across various institutions and determine how much services, including prescription drugs, actually cost—and who is paying for them.

Our panelists underscored that value is not necessarily economic: A person’s health has infinite value in his or her eyes, after all. However, assigning a price to a drug on the basis of “what the market can bear” or a formula that recoups the actual or potential monetary value of that drug in the first year or so of drug sales is not a strategy for good health care or affordable health care costs.

Spanning topics as diverse as economic policy, societal responsibility and moral hazard, ACHP’s live interview highlighted the fact that finding solutions to the rising drug cost and price dilemma is both complicated and urgent.


Access a summary and recording of the event on our website.

For more coverage of the event, visit FierceHealthPayer’s article on their website.


-Patricia Smith
ACHP President and CEO