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Specialty drugs could fuel health care inflation

Doctor

A doctor wears a stethoscope as he see a patient for a measles vaccination during a visit to the Miami Children's Hospital on June 02, 2014 in Miami, Florida.

Since the recession, U.S. employers' health care spending growth has been slowing from year to year. That's about to change, according to a new report from PricewaterhouseCoopers’ Health Research Institute.

The report says employer health care spending will accelerate in 2015, rising by 6.8 percent, a slightly faster rate of growth than what the company projected for 2014. The report’s authors say expensive specialty drugs will play a role in fueling the sharper rise in spending.

"It's actually a very big deal in terms of dollars. It's one of the reasons we single out that factor for 2015,” says Ceci Connolly, managing director of PricewaterhouseCooper’s Health Research Institute.

Connolly points to a new treatment for Hepatitis C as an example of the new, high-cost drugs. Hepatitis C is a virus that causes liver disease and affects about 3 million Americans. One breakthrough drug, Sovaldi, can completely cure Hepatitis C in a high percentage of patients. But a twelve-week treatment costs $84,000.

However, in the case of Hepatitis C drugs, the hit to employers might not last long, according to Princeton University health care economist Uwe Reinhardt.

“Eventually all the people with Hep C will be cured, and all you have to do is deal with the new ones, which is not that heavy a growth,” he says.

The PricewaterhouseCoopers researchers say that in the short-term, employers will probably try to offset higher medical costs by shifting more of them to workers.

About the author

Annie Baxter covers education.

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