Consumers under age 65 will likely see prescription drug costs rise 11.6% in 2017 on the heels of an 11.3% rise in 2016, according to consulting firm Segal.
The Segal report projects Medicare-eligible retirees will see higher drug costs, with specialty drugs costing 18.7% more than year ago. In comparison, wages are expected to grow just 2.5% this year.
Segal said the primary drivers of prescription benefit costs are higher prices for brand-name, non specialty drugs and specialty drugs, for which there is greater use. Segal said less than 1% all medications are deemed specialty drugs, but survey respondents indicated they account for more than 35% of their drug costs. Just two years ago specialty drugs accounted for 25% of the consumer’s total prescription costs. The 18.7% jump in specialty drug costs is the largest increase in several years.
Segal asserts that given the increasing number of pharmaceutical products available for conditions that require the use of speciality medications, plan sponsors should implement strategies to manage patients who use these drugs and target their costs.
A Kaiser Family Foundation poll conducted in September found four out of five consumers think drug prices are unreasonable. The Kaiser report said consumer budgets in many cases are crimped because of runaway drug costs also noting that legislation and congressional investigations into drug pricing has done little to reduce costs.
Kaiser also notes more consumers no longer have prescription cards attached to their health insurance plans as premiums were higher after the Affordable Care Act legislation. Many consumers got a close look at actual drug costs in 2016 when they had to pay for the entire cost of the drugs themselves.
Following are the most expensive prescription drugs in 2016 according to GoodRx.
• Sovaldi – by Gilead Science is used for hepatitis C virus
• Harvoni – by Gilead Science also used for hepatitis C
• Cinryze -owned by Shire Pharma, injectable drug to prevent swelling and pain
• H.P. Acthar – owned by Bristol Meyers and is widely used to treat allergies, breathing, blood or endocrine problems, arthritis, skin and eye issues, inflammation, multiple sclerosis and certain cancer
• Daklinza – owned by Bristol-Myers Squibb to treat Hepatitis C
The makers of these expensive drugs have defended their costs by saying particularly the Hepatitis C drugs save and extend lives and offer value when compared to transplant costs and other hospitalizations that occur with the worst Hepatitis C complications. Healthcare consultants say the debate on drug costs will no doubt continue this year and overall prescription expenditures will rise again.
The higher drug costs are largely responsible for pushing overall medical care expenditures up this year. That said, the cost trends for typical medical care vary somewhat across regions, according to the Segal report. The Northeast had the lowest anticipated medical care cost increases at 7% for this year. The Midwest was next at 7.4% and the Southeast, which includes Arkansas is expected to see medical costs rise 7.9% this year; while the West region’s cost trend is predicted to be up 9.2%.
Segal consultants said healthy competition of providers in the Northwest is the primary reason consumers may see the lowest cost increases. The report warns that as insurers continue to merge — Aetna and Humana or Anthem-Cigna — less competition will likely fuel higher prices.