Innovative Therapies Will Have Minimal Impact On Healthcare Costs : Study

The widening use of new, innovative biopharmaceutical treatments for diseases, such as cancer, multiple sclerosis and heart disease, will have a limited impact on healthcare costs for private healthcare payers over the next several years, according to an independent study released today by the Biotechnology Industry Organization (BIO).

The study, prepared by the international actuarial firm Milliman, Inc. and titled Realizing the Value of FDA-Approved Therapies, found new innovative therapies, including both new drugs and biologics, will add one percent to the healthcare costs covered by private commercial payers, such as insurance companies and employer-sponsored health plans. This increase translates to an additional claims cost to private payers of about $5 per member per month.

Moreover, the study found that private payers can make minor changes in their benefit plans to assure the affordability of innovative therapies for their members.

The Milliman study reports that the costs of innovative therapies will generally not create a large cost burden relative to other costs for private healthcare payers by 2011. The total cost for all innovative therapies (existing and new) approved by the U.S. Food and Drug Administration (FDA) is estimated to be about 6 percent of total private commercial payer costs by 2011. This compares to about 5 percent for 2006.

“The largest healthcare expense borne by payers is not prescription drug and biologic costs but hospital and other non-drug costs," stated Bruce Pyenson, Principal and Consulting Actuary, Milliman, and author of the report. "While prescription drug costs account for about 14 percent, non-drug costs account for 86 percent of expense borne by payers, according to Milliman's 2006 Group Health Insurance Survey of HMOs.”
Sources : www.bio.org

(Ref : Biospectrum dated April 2007).