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AARP Report on Exploding Costs for Specialty Drugs

by John Norton | Sep 21, 2017

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The trend is unmistakable. The marketplace is flooded with more and more expensive specialty drugs each year. AARP recently published "Rx Price Watch Report: Trends in Retail Prices of Specialty Prescription Drugs Widely Used by Older Americans: 2006 to 2015" by Leigh Purvis and Dr. Stephen W. Schondelmeyer. It is filled with statistical information that should concern every American. The study looks at specialty drug prices from 2006 — 2015 and found:

  • In 2015, the 101 most widely-used specialty drugs increased by 9.6 percent (the highest yearly increase since 2006), which contrasts to the general inflation rate of 0.1 percent over the same time period.

  • In 2015, the price for one specialty drug used on a chronic basis was $52,486. That is a little less than the median U.S. household income of $55,775, twice the median income for a Medicare beneficiary — $25,150, and 3.5 times higher than the average Social Security retirement benefit of $16,101.

  • For patients who take a specialty drug on a chronic basis, the average price rose nearly $35,000 from 2006 to 2015.

  • The average annual price for specialty drugs is nine times higher than brand-name prescriptions and 100 times higher than generics.

The upward trajectory in prices is unsustainable. Federal and state legislators and regulators are considering many solutions. But often missing from the discussion are the problems associated with virtually unchecked administrators of prescription drug benefits for 253 million Americans: pharmacy benefit managers. Non-transparent operations of PBMs can add costs through rebate retention, administrative fees, and spread pricing. If we unravel the mystery of exactly where the money is going, then we can begin to lower the costs of specialty drugs along with less expensive brand and generic drugs.

Two bills that help achieve this goal are S. 413 / H.R. 1038, the Improving Transparency and Accuracy in Medicare Part D Drug Spending Act and H.R. 1316, the Prescription Drug Price Transparency Act. They need to become the law of the land, so press Congress to act. Bringing down specialty drug prices won’t happen overnight, but we can start the process by holding PBMs accountable for their contributions to the problem.