Monday, November 23, 2015

Specialty Drug Prices Soar Past $50,000 a Year

These are increases in the prices of existing drugs. Somehow drug companies made a profit on them before the large price increases.

Fiscal Times

By Eric Pianin
November 20, 2015

A new report on the startling rise in the cost of “specialty drugs” warns that Americans should brace for substantial increases in their health care costs, whether they use the drugs or not.

Although there is no precise definition for specialty drugs, many of them are relatively new, are administered by injection and are used to treat conditions that often impact older Americans, such as cancer, rheumatoid arthritis and multiple sclerosis.

Specialty drugs are among the most expensive drugs on the market and can often cost hundreds of thousands of dollars a year.

As the cost of the drugs is absorbed by private insurers or government health care programs, average Americans eventually will feel the impact in the form of higher insurance premiums and deductibles, higher taxes or offsetting cuts in government services.

The study by the AARP Public Policy Institute of 115 specialty drugs widely used by older Americans found that prices increased by an average of 10.6 percent in 2013, in contrast with a general inflation rate of 1.5 percent over the same period. The average retail cost of a year’s worth of just one of those drugs was $53,384 – or more than the median U.S. household income.


But as the AARP study stresses, higher prescription drug prices invariably are passed along to anyone with health insurance in the form of increased health care premiums, deductibles or other forms of cost sharing by insurers. Moreover, government health programs including Medicare and Medicaid eventually will become far more costly to operate as demand for these drugs continues to rise.

The Medicare Payment Advisory Commission recently attributed the majority of “excess” growth in Medicare Part D spending on drugs to growth in the average price of medications provided to enrollees, according to the AARP report.

“Spending increases driven by high and growing drug prices will affect all Americans in some way,” the report warned. “Those with private health insurance will pay higher premiums and/or cost sharing for their health care coverage. Similarly, spending by government health programs will grow faster than the tax-based revenue that supports them, leading to higher taxes and/or cuts in public health or other programs.”

tags: price gouging

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