In 2011, Bristol-Myers Squibb set the price of its newly approved melanoma drug ipilimumab—brand name Yervoy—at $120,000 for a course of therapy. The drug was associated with an incremental increase in life expectancy of four months. Drugs like ipilimumab have fueled the perception that the launch prices of new anticancer drugs and other drugs in the so-called “specialty” pharmaceutical market have been increasing over time and that increases are unrelated to the magnitude of the expected health benefits. In this paper, we discuss the unique features of the market for anticancer drugs and assess trends in the launch prices for 58 anticancer drugs approved between 1995 and 2013 in the United States. We restrict attention to anticancer drugs because the use of median survival time as a primary outcome measure provides a common, objective scale for quantifying the incremental benefit of new products. We find that the average launch price of anticancer drugs, adjusted for inflation and health benefits, increased by 10 percent annually—or an average of $8,500 per year—from 1995 to 2013. We argue that the institutional features of the market for anticancer drugs enable manufacturers to set the prices of new products at or slightly above the prices of existing therapies, giving rise to an upward trend in launch prices. Government-mandated price discounts for certain classes of buyers may have also contributed to launch price increases as firms sought to offset the growth in the discount segment by setting higher prices for the remainder of the market.

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Obese people incur higher health care costs at a given point in time, but how rising obesity rates affect spending growth over time is unknown. We estimate obesity-attributable health care spending increases between 1987 and 2001. Increases in the proportion of and spending on obese people relative to people of normal weight account for 27 percent of the rise in inflation-adjusted per capita spending between 1987 and 2001; spending for diabetes, 38 percent; spending for hyperlipidemia, 22 percent; and spending for heart disease, 41 percent. Increases in obesity prevalence alone account for 12 percent of the growth in health spending.

BACKGROUND: Differences in health literacy levels by race and education are widely hypothesized to contribute to health disparities, but there is little direct evidence. OBJECTIVE: To examine the extent to which low health literacy exacerbates differences between racial and socioeconomic groups in terms of health status and receipt of vaccinations. DESIGN: Retrospective cohort study. PARTICIPANTS (OR PATIENTS OR SUBJECTS): Three thousand two hundred and sixty noninstitutionalized elderly persons enrolling in a Medicare managed care plan in 1997 in Cleveland, OH; Houston, TX; South Florida; and Tampa, FL. MEASUREMENTS: Dependent variables were physical health SF‐12 score, mental health SF‐12 score, self‐reported health status, receipt of influenza vaccine, and receipt of pneumococcal vaccine. Independent variables included health literacy, educational attainment, race, income, age, sex, chronic health conditions, and smoking status. RESULTS: After adjusting for demographic and health‐related variables, individuals without a high school education had worse physical and mental health and worse self‐reported health status than those with a high school degree. Accounting for health literacy reduced these differences by 22% to 41%. Black individuals had worse self‐reported health status and lower influenza and pneumococcal vaccination rates. Accounting for health literacy reduced the observed difference in self‐reported health by 25% but did not affect differences in vaccination rates. CONCLUSIONS: We found that health literacy explained a small to moderate fraction of the differences in health status and, to a lesser degree, receipt of vaccinations that would normally be attributed to educational attainment and/or race if literacy was not considered.

We examine the impact of the rise in treated disease prevalence on the growth in Medicare beneficiaries' health care spending. Virtually all of this spending growth is associated with patients who are under medical management for five or more conditions. This is traced to both a rise in true disease prevalence and changes in clinical treatment thresholds. Using the metabolic syndrome as a case study, we find that the share of patients treated with medications has increased 11.5 percentage points in less than ten years. This raises important questions about the "fit" of how Medicare pays for services for complex medical management.