You’ve probably well aware that inflation is the highest it’s been in decades. Some say this was to be expected since we’re coming out of a two-year pandemic. Others point to supply chain issues caused, in part, by Russia’s attack on Ukraine. Others blame the Biden administration’s economic policy. Still others point out the record profits that companies are making and say the price increases are driven by nothing more than corporate profits. Who knows – it could be a combination of all these factors.
Regardless of the reason, one thing’s for certain: prices for all sorts of consumer goods are going up. And now there’s evidence that that’s happening with drug prices as well.
According to a recent report published by the American Journal of Health-System Pharmacy, compared to 2020, “overall pharmaceutical expenditures in the US grew 7.7%” in 2021 “for a total of $576.9 billion.” The same study expects “overall prescription drug spending to rise by 4.0% to 6.0%” in 2022.” On the high end, that’s nearly 14 percent in just two years—and prescriptions were already expensive before the latest jumps.
Fortunately, most of your clients have health insurance to help pay for their monthly medications, but some of them may still have significant out-of-pocket exposure. For individual plans without copayments, some people meet their entire deductible and out-of-pocket limit just from the cost of prescription drugs. And for people on Medicare, many of the more expensive drugs are in tier four of their Part D plan’s formulary, which means they might have to pay 25 to 33 percent of the cost. When the prescription is hundreds or even thousands of dollars per month, beneficiaries can quickly blow through their coverage gap and enter the catastrophic coverage level.
Two drugs in particular are responsible for a LOT of the total money spent by Medicare Part D plans. An April 7 article in Healthcare Finance News reports that “Eliquis and Xarelto, two blood-thinning medications that are already among Medicare's costliest, have seen their list prices more than double since entering the market.” The figures come from a new report by Patients for Affordable Drugs, which says that the “prices of both drugs have risen every year, far outpacing the rate of inflation. As of January 2022, the prices of a month's supply of Eliquis and Xarelto are $529 and $516, respectively.” In total, “Medicare Part D has spent more than $46 billion on the two drugs” since 2015.
Because so many people have Medicare coverage, and because of how much the program spends on prescription drugs, many argue that the government should be able to negotiate with pharmaceutical companies, claiming that doing so would save billions of dollars per year. President Biden called for this solution in his State of the Union address. After acknowledging that there are “great disagreements” on this issue, he said, “let’s let Medicare negotiate the price of prescription drugs. They already set the price for VA drugs.”
One idea that has gained support recently, also mentioned by President Biden in the State of the Union, is capping the price of insulin for people with health insurance. In fact, the House of Representatives passed a bill on March 31 that would do just that. According to The Hill, “Medicare beneficiaries would pay no more than $35 for each 30-day insulin prescription” under the bill. “Cost sharing for beneficiaries in private plans would be limited to the lesser of either $35, or 25 percent of the health plan’s negotiated price for a 30-day prescription.” There are similar bills in the Senate, and there is some bipartisan support for capping the cost of insulin, but it’s unclear at this point what the final version of the bill will look like and what chance it has of passing.
The point is this: whether you sell individual products, Medicare products, or both, clients need your help now more than ever. Making a policy recommendation isn’t as simple as comparing premiums and out-of-pocket costs. You also need to search for plans whose networks include your clients’ providers and whose formularies cover your clients’ medications. Or offer your clients a stand-alone plan like PRAM underwritten by Nationwide Insurance. Without prescription coverage, a lot of people would have trouble paying for their medications.