As we roll into 2021 claims costs are rising at a rate of 3x CPI. Pharmacy costs are a leading cause. It can be confusing navigating prescription drug costs. We have recently seen the most expensive drug ever approved, Zolgensma, at almost $2.2 million a prescription. Zolgensma, is a gene therapy medication used to treat spinal muscular atrophy. It was approved for children less than two years old in 2019. It is amazing, and literally life-saving. While Zolgensma is an outlier, at this cost, other prescriptions are rising as well.
The rising cost of prescriptions
In a survey released by Harvard and Politico 87% of those polled favored Federal action due to the rising costs of medications. The problem is far-reaching, 46brooklyn research, a nonprofit trying to improve access to drug costs, found that in 2020 over 500 prescriptions reviewed had gone up in price, by a median rate of 4.6%. The frustrating part of this is these prescriptions have been on the market for years in some cases. A survey released by the nonpartisan Kaiser Family Foundation finds that many people have skipped or rationed their prescription medications or have substituted cheaper over-the-counter drugs. As NPR reports, “The result? Those who ration their meds are often sicker.”
Humira, on the higher cost prescriptions by volume, has been on the market since 2002. The formula is basically unchanged since then. If you were to equate this to the retail marketplace, think of the iPhone. In 2012 Humira cost $19,000. Today the cost is over $60,000 for the exact same medication. In 2012 the iPhone 5 came out at $199. If the iPhone 5 were to follow the same trajectory, the iPhone 5 would be the only iPhone available today at a cost of approximately $600.
Lack of competition in the market
While we have talked about Humira, it’s not a Humira-only problem. As mentioned, over 500 prescriptions have gone up in 2020 alone. Insulin is life-saving and necessary for millions of Americans. It is seeing the exact same price increases for the same medication. The question is asked, why and the best answer seems to be there is no competition. The way the system is built, there is no ability for competitors to come with something new.
Prescription drug advertising
The recent Oprah interview with Harry and Meghan was shown on UK television through a US Broadcaster. This introduced the UK viewing audience to something they are not accustomed to seeing- prescription advertisements. Drug advertisements are a part of the problem as well. According to the NY Post, Washington Post, and others, the UK audience was stunned to see this. An article in the Washington Post said, “Like other European countries, the United Kingdom bans pharmaceutical companies from advertising directly to consumers on the grounds that doctors should be making independent decisions about what drugs to prescribe — rather than fielding requests from patients eager to try something they have seen advertised on television.”
What can be done?
Which leads to what can be done. There is no easy answer. The Federal government will need to be involved at some point to enact any ongoing change. For individuals there are a couple of immediate solutions:
Know your prescriptions
1- Be aware of the prescriptions you are on. Ask questions. See if there are alternatives.
Shop around for the best price
2- The same prescription is not the same price, it changes based on the different pharmacies. This can make it very frustrating if the price is higher than you are expecting. Use tools from your medical carrier or others like CleverRx or the app GoodRx to determine those prices.
Work with your carrier to find the best price
3- Engage with your medical carrier if they outreach, oftentimes they are attempting to help you find the best option at the best price with the most effective results. When it comes to making any changes in your medical care and prescriptions, you should consult your doctor.
There are things you can potentially do as a plan sponsor as well. It may take some creativity on part of you as the plan and with your broker. Be open to options and alternatives. If we continue with the status quo, we will continue to get the same results. Diversified Insurance Group’s Benefits team can help answer your questions. Contact them here.