Increasing Specialty Drug Prices Could Bring Down Insurers, Consumers
Specialty drugs are medications for chronic or complex health conditions, such as rheumatoid arthritis, multiple sclerosis, and tumors. They need to be handled, administered and monitored in a specific and meticulous manner. Hence, specialty drug prices are expensive. In fact, they are defined as high-cost prescription medications, as they empty patients’ pockets in no time.
The cost of specialty drugs may also destroy the insurers, possibly making them broke. Medications for oncology therapies for example, will clean out both insurers and consumers. In 2012, the prices of the drugs approved by FDA for chronic myeloid leukemia (CML) were above $100,000 per year. Ponatinib costs $138,000 a year. Moreover, Sovaldi, an alternative to the hepatitis C drug, costs $1,000 per pill.
How can specialty drug prices destroy insurers?
According to Lori McLaughlin, a spokeswoman of WellPoint, one of the biggest health care insurers in the U.S., “Drug costs are a significant part of premiums”. Since health insurance premiums are sensitive to how much insurers have to pay the drug manufacturers, they may have to ration care to prevent insolvency. Otherwise, the high cost of drugs will overrun their operations.
Moves to keep premiums in check are already underway. Staff handling the Oregon Health Plan (OHP), for instance, have recommended denying routine coverage for Sovaldi, as it is likely to cause bankruptcy. About 7,000 people in need of the prescription medication would cost OHP a whopping $168 million a year.
How can specialty drug prices hurt consumers?
Uninsured patients would have difficulty obtaining the medication, given their high costs. On the other hand, insured individuals may also have to pay out of pocket if insurers ration the specialty drugs. But what’s worse is that insurers are tightening up the list of drugs that plans will cover or their formularies. Pharmacy benefit managers (PBMs) who process and pay claims for prescription drugs and negotiate prices are now dropping brand-name drugs, limiting options for patients in the process.
Consumers may need to switch health insurance providers if the specialty drug they need is no longer on the list. What if the only provider who offers the plan would take advantage of their situation and raise premiums to astronomical rates?
Unless prices of specialty medication hit a mark that will work best for both insurers and consumers, it will be a source of concern for people who need treatment for their complex health condition and the companies providing health insurance.
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