Abstract
High out-of-pocket drug costs can cause patients to skip treatment and worsen outcomes, and high insurer drug payments could increase premiums. Drug wholesale list prices have doubled in recent years. However, because of manufacturer discounts and rebates, the extent to which increases in wholesale list prices are associated with amounts paid by patients and insurers is poorly characterized. To determine whether increases in wholesale list prices are associated with increases in amounts paid by patients and insurers for branded medications. Cross-sectional retrospective study analyzing pharmacy claims for patients younger than 65 years in the IBM MarketScan Commercial Database and pricing data from SSR Health, LLC, between January 1, 2010, and December 31, 2016. Pharmacy claims analyzed represent claims of employees and dependents participating in employer health benefit programs belonging to large employers. Rebate data were estimated from sales data from publicly traded companies. Analysis focused on the top 5 patent-protected specialty and 9 traditional brand-name medications with the highest total drug expenditures by commercial insurers nationwide in 2014. Data were analyzed from July 2017 to July 2020. Calendar year. Changes in inflation-adjusted amounts paid by patients and insurers for branded medications. In this analysis of 14.4 million pharmacy claims made by 1.8 million patients from 2010-2016, median drug wholesale list price increased by 129% (interquartile range [IQR], 78%-133%), while median insurance payments increased by 64% (IQR, 28%-120%) and out-of-pocket costs increased by 53% (IQR, 42%-82%). The mean percentage of wholesale list price accounted for by discounts increased from 17% in 2010 to 21% in 2016, and the mean percentage of wholesale list price accounted for by rebates increased from 22% in 2010 to 24% in 2016. For specialty medications, median patient out-of-pocket costs increased by 85% (IQR, 73%-88%) from 2010 to 2016 after adjustment for inflation and 42% (IQR, 25%-53%) for nonspecialty medications. During that same period, insurer payments increased by 116% for specialty medications (IQR, 100%-127%) and 28% for nonspecialty medications (IQR, 5%-34%). This study's findings suggest that drug list prices more than doubled over a 7-year study period. Despite rising manufacturer discounts and rebates, these price increases were associated with large increases in patient out-of-pocket costs and insurer payments.
Highlights
Large increases in drug prices outpacing increases in income or general inflation in recent years have put the pharmaceutical industry under scrutiny.[1,2,3,4,5] As cost-related drug nonadherence is already widespread, rising drug prices raise concerns that patients will be unable to afford their prescriptions, leading to negative health outcomes.[6]Newly developed medications are often expected to be expensive because of high research and development costs, there is debate about how to estimate these costs.[7]
MAIN OUTCOMES AND MEASURES Changes in inflation-adjusted amounts paid by patients and insurers for branded medications. In this analysis of 14.4 million pharmacy claims made by 1.8 million patients from 20102016, median drug wholesale list price increased by 129%, while median insurance payments increased by 64% (IQR, 28%-120%) and out-of-pocket costs increased by 53% (IQR, 42%-82%)
Median patient out-of-pocket costs increased by 85% (IQR, 73%-88%) from 2010 to 2016 after adjustment for inflation and 42% (IQR, 25%-53%) for nonspecialty medications
Summary
Large increases in drug prices outpacing increases in income or general inflation in recent years have put the pharmaceutical industry under scrutiny.[1,2,3,4,5] As cost-related drug nonadherence is already widespread, rising drug prices raise concerns that patients will be unable to afford their prescriptions, leading to negative health outcomes.[6]Newly developed medications are often expected to be expensive because of high research and development costs, there is debate about how to estimate these costs.[7]. Recent reports of substantial increases in list prices of drugs already on the market cannot be explained by development costs and have received considerable media attention[3,4,8,9] and criticism from lawmakers, insurers, and consumers alike.[1,10,11,12] pharmaceutical industry leaders argue that changes in wholesale list prices do not necessarily lead to large changes in amounts patients or insurers pay for drugs.[13,14,15] Drug manufacturers have argued that increases in list prices are due to increases in discounts or rebates, not increases in actual amounts paid by patients and payers.[16]
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