People in the United States end up paying more for prescription drugs over time due to rising list prices, according to new research.
In a paper published this month in JAMA Network Open, a team of researchers led by Dr. Benjamin Rome, an instructor of medicine at Harvard Medical School and a researcher at Brigham and Women’s Hospital in Boston, reported that the list price of 79 brand-name drugs rose by more than 16 percent while average out-of-pocket costs went up by more than 3 percent from 2015 to 2017.
Rome told Healthline that the findings shine a light on drug policy in the United States.
“I think most people who work in insurance companies and health policy experts recognize this problem, which is that a growing number of patients are paying coinsurance and deductibles that are based on the list price of the drugs,” he said. “I don’t think our findings are terribly unexpected in that sense, but they do prove a key point that I think has big policy implications as Congress and states figure out how to get their pricing under control.”
Perhaps the biggest contributor to rising out-of-pocket costs is that drug manufacturers are unregulated — they can set any price they feel is appropriate for a given drug, even if it outpaces inflation.
Rome says drafting legislation that would add oversight — which was proposed last year — could help.
Another possible solution? Get rid of rebates, so there’s a single price paid by the insurance company and the consumer.
A third option could be for insurance companies to pass on rebates to consumers.
“This means that even if insurance companies keep getting the rebates, they should not be allowed to calculate patients’ out-of-pocket costs or charge patients a percentage of the list price,” Rome said.
Generic versions of drugs can offer consumers an option when name brand prices get too high.
Dr. Jessica Nouhavandi, the co-founder and co-CEO and lead pharmacist at Honeybee Health, an online pharmacy that sells generic medications, told Healthline that the branded version of a given medication is generally significantly more expensive than the generic version.
“We actually performed an analysis of 10 popular maintenance medications, comparing the price of the branded version of a medication to the price of the generic version,” she said. “For instance, for the brand-name drug Lipitor, the average cost is $521.21. Meanwhile, the generic version, atorvastatin, costs on average $79.52.”
Nouhavandi added that even for people with health insurance, it’s often cheaper to buy drugs directly. She noted that when she worked at a pharmacy, the markup was astonishing.
“When I looked up the acquisition price of a medication, I was often stunned by the markup,” Nouhavandi said. “Standard cholesterol medications that my store purchased for $2 were being sold to patients through their insurance for $90. In countless cases, medication – even generic medication – was cheaper without insurance. But as long as a given pharmacy works within the system, they’re beholden to the insurance companies, pharmacy benefit managers, and other middlemen that mark up the price at every turn.”
While the drug policy landscape can be complicated, Rome says it’s critical for all players involved to focus on consumers when creating new laws and guidelines.
“There’s a lot of discussion around prescription drug prices and reining in the high costs of prescription drugs,” he said. “Ultimately, we need to make sure that as we think about policies, we need to keep patients at the center of those policies. The amount that insurance plans are charging patients for the drugs have a huge impact on whether patients are able to afford the medications, and therefore whether they take the medications and whether they work.
“We have a lot of great medications that can help patients with a range of problems, but if they can’t afford them, we’re not going to be able to do much for them. So the key is to make sure that we don’t lose sight of the out-of-pocket costs as the drug policy debate keeps going,” Rome said.
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