Analysis

Patients Paying More for Specialty Drugs as Costs Continue to Rise

Drug costs are rising in the United States for many patients who are undergoing costly treatments for serious diseases such as cancer and hepatitis C, according to a report from the IMS Institute for Healthcare Informatics.

In 2013, the out-of-pocket costs for prescription drugs were fairly lopsided. That is, patients paid on average less than $5 in out-of-pocket costs for prescription drugs because of cheaper generic versions on the market. But patients needing more-expensive drugs got hit much harder, with barely 2 percent of all prescriptions accounting for 30 percent of all out-of-pocket costs. Pew’s specialty drugs project works to identify policy options that could help manage such costs.  

The report traces the discrepancy in costs to pharmaceutical companies that lose sales when generics that compete with their brand-names drugs are introduced to the market. To make up for lost revenue, the companies focus on developing treatments for more complex “orphan diseases,” which affect fewer than 200,000 people nationwide.

“The new drugs coming to market are more specialized, and more tailored to smaller populations of patients, which tends to make them more expensive because fewer people are ultimately going to take them,” Caroline F. Pearson, vice president of Avalere Health, a health care consulting firm, told The New York Times. To compensate for this trend, health plans are increasingly shifting costs to the consumer. 

The IMS report found that specialty drug costs helped push overall spending on prescription medicine in the United States to more than $329 billion in 2013, an increase of 3.2 percent. Pharmacy benefit managers—those who administer prescription drug plans—across the country predict that these costs will continue to rise, particularly among specialty drugs. CVS Caremark, for example, reported that spending on these drugs grew by 15.6 percent in 2013, compared with a rise of only 0.8 percent for traditional pharmaceuticals over the same period.  And The New York Times reported that Express Scripts projected a 63 percent increase in specialty drug spending in the United States between 2014 and 2016.

Read the report.

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