The impact of prescription drug costs on health spending

I am employed by a hospital, and have health insurance through my job. The coverage is comprehensive, and the cost has an employer contribution and employee contribution. I still get confused (though I have the hospital’s own plan) about what is covered and what is not. I can only imagine how hard it must be for my patients.

The prescription plan that comes with this insurance is straight forward: $40 for brand name pharmaceuticals (for ones on the formulary), and $10-$15 for generics. There are some exceptions to this price structure, but it is fairly simple.

I recently switched pharmacies, and had prescriptions transferred to the new big chain pharmacy. One prescription is for a generic medication, the other prescription is for a brand name (old medication that has been around a long time). The new pharmacy did not yet have my insurance information so I was not surprised that when I received an email that my prescriptions were ready I did not see the copays I listed above. Instead, 30 pills of the generic medication were $68 and the branded $148.

When I went to pick up the medications, my 14 year old son was with me. He wanted to know if it was for some new rarified prescription agent as he was shocked at the cost being so high. I explained that actually those prices are low – new drugs, particularly chemotherapeutic agents could be thousands per month.

I was, however, a bit surprised at the price, so when we got home, I looked it up. The sticker price of the one that this big chain wanted to charge me $148 for 30 pills is $84.97 for 90 pills. The sticker price of the generic medication that they wanted to charge me $68 is $15 for 30 pills.

How can we possibly reign in medical costs when our pharmaceutical costs exceed that of any other nation (the excuse being funding research and development but that does not explain why we pay for the whole world’s drug supply) and further pharmacies are taking advantage of us?

I understand profit but this is seriously out of hand. Year after year drug companies enjoy higher profits than any other industry – on the order of 17% compared with 3.1% of non pharmaceutical companies on the Fortune 500 list. The pharmaceutical industry claims to be a high-risk business however business that is consistently so profitable can hardly be considered risky. This profit comes from excess prices, only paid in the United States.

Right now, prescription drug costs are only 11% of healthcare spending but it is the fastest rising sector. With an aging population that percentage is shifting. Thanks to the obesity epidemic we can expect spending on hypertension, diabetes and other complications are going to go up, with medications the mainstay of therapy. We need accountability – from insurers, pharmaceutical companies and pharmacies.

Cathleen London is a physician who blogs at Progress Notes.

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