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Spending on specialty drugs for cancer, hepatitis and other conditions in Wisconsin’s Medicaid program is up 40 percent the past four years, a trend that could continue as more specialty drugs are approved, a state administrator said Thursday.

Medicaid spending on prescription drugs overall is relatively flat, largely because drug companies are required to give Medicaid programs rebates, said Rachel Currans-Henry, director of Medicaid benefits management for the state Department of Health Services.

But the rebates could be in jeopardy under Medicaid block grants being considered as part of federal health care reform, Currans-Henry said.

“We need to be careful,” she said. “We don’t want the drug rebate program going away.”

Currans-Henry addressed prescription drug spending in Medicaid, the state-federal health program for the poor, at a forum at the Capitol on drug costs. The event was sponsored by the Evidence-Based Health Policy Project, part of UW-Madison’s Population Health Institute.

Nationwide, health care spending makes up nearly 18 percent of the economy. Prescription drugs account for about 10 percent of the cost, a share that has been rising.

Specialty drugs — high-cost drugs, often injected or infused, for conditions such as cancer, hepatitis, hemophilia, HIV and autoimmune diseases — are driving much of the increase in drug spending.

An example is Sovaldi, a drug approved in 2014 for hepatitis C, which initially cost $84,000 for a 12-week course of treatment. Another is Emflaza, approved this year for Duchene muscular dystrophy, with a list price of $89,000 a year.

Specialty drugs accounted for 28 percent of pharmacy revenue last year, up from 17 percent in 2011, and they’re expected to make up 42 percent of revenue by 2021, said Joe Cesarz, ambulatory services pharmacy director at UW Health.

Price increases for specialty drugs are often double or triple the rate of inflation, Cesarz said. To combat the hikes, he said, Wisconsin could consider a law like one adopted last year in Vermont, which requires drug companies to justify big increases.

State Reps. Melissa Sargent, D-Madison, and Deb Kolste, D-Janesville, introduced a similar measure last year, but it hasn’t received much attention in the Republican-controlled Legislature.

Currently, “manufacturers are free to set the prices at what they feel is appropriate,” said Kevin Look, an assistant professor in UW-Madison’s School of Pharmacy.

Drug companies say high prices are needed to develop new drugs. But marketing and profit eats up half of their revenues, while research consumes only 17 percent, Look said.

Administrators from Wisconsin’s Medicaid program, the state Department of Corrections and the state Department of Employee Trust Funds have talked about purchasing drugs together to bring down costs, Currans-Henry said. Wisconsin is also talking to Medicaid programs in other states about joint purchasing, she said.

Meanwhile, the state is telling providers when Medicaid patients are getting drugs in doses considered too high, Currans-Henry said. A review of children on stimulants, for example, led to a 50 percent reduction of children on excessive doses, she said.

Re-importing drugs from Canada, encouraging retirees to enroll in Medicare Part D and banning coupons that mask the cost of drugs to consumers are other steps states can take to try to address prescription costs, said Eileen Mallow, an Employee Trust Funds administrator.

Another idea: Regulate the pharmaceutical industry like a public utility, at least for drugs that address public health problems such as hepatitis C. The utility model was proposed last year in a national report to which Mallow contributed.

“It serves a public good to have certain drugs available in reasonable ways,” Mallow said. For hepatitis C, “it would stop the spread of a very expensive illness.”

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David Wahlberg is the health and medicine reporter for the Wisconsin State Journal.