Prescription drug prices escalating cost of health care

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Prescription drug prices are skyrocketing making it hard for some patients to afford the care they need.

According to the American Hospital Association (AHA), during the COVID-19 pandemic, drug companies took the opportunity to significantly raise the prices of existing drugs as well as introduce new drugs at record prices.

In a report on the health of hospitals following the pandemic, the AHA said high drug prices affect both patients and hospitals, especially when purchasing provider-administered drugs.

“In fact, for the first time in history, the median price of a new drug exceeded $200,000 — a staggering figure that implies a double-digit year-over-year price growth,” AHA said in its report.

Nicole Stallings, president and CEO, Hospital and Healthsystem Association of Pennsylvania (HAP), said this is a “significant health concern” especially for people with chronic conditions.

Many drugs, especially those for treatment of cancer and Rheumatoid arthritis, have increased 31.6%, far above inflation, she said.

“That is unheard of inflation,” she said.

And it’s not just the consumer. Stallings said hospitals are seeing the increase as well. Costs rose 19.7% from 2019 to 2022.

All of this impacts employers as it increases the cost of health care, she said.

Joe Haddock, segment president, Eastern Pennsylvania, Highmark Inc., said insurers look at formulary management to try to keep the costs down.

“At the end of the day, we want people to have the right drugs at the right time,” he said. “When things occur, we address the issue for employers and try to offer ways to balance costs.”

One way to do that, Haddock said, is generic drugs, which are generally cheaper but just as safe as name brands which cost more due to research, development and marketing.

While hospitals are consumers when it comes to pharmaceuticals, Stallings said many start working with patients at admission to help create a plan where medications can be provided.

She cited 340 programs that help hospitals buy medications at discounted prices which they can then provide to patients at no or low-cost.

The 340B Drug Pricing Program is a US federal government program created in 1992 that requires drug manufacturers to provide outpatient drugs to eligible health care organizations and covered entities at significantly reduced prices.

“Where people get their medications can affect the cost,” Haddock said. “Some drugs are covered under medical plans and some under pharmacy plans.”

Haddock said Highmark works with pharmacy networks because they have stronger buying power and can offer lower prices.

Capital Blue Cross, in a statement, said it is combatting rising drug costs through a multipronged initiative to drive costs down.

The company cited its FlexAccess program, which it said is designed to lower the cost of expensive specialty drugs – including those for rheumatoid arthritis, psoriasis, and Crohn’s Disease.

FlexAccess automatically applies drug manufacturer coupons and other savings programs offered by drug makers directly to enrolled employers, reducing out-of-pocket costs for Capital members, Capital Blue Cross said.

The company also collaborates with Mark Cuban Cost Plus Drugs, allowing members to use their Capital coverage at Cost Plus Drugs’ online pharmacy to save money on critical prescriptions.

Capital said members taking advantage of the program are generally trimming 30% to 40% of their drug costs, with savings as high as 98% for Medicare Part D members.

“Capital’s efforts to drive down drug costs also include: a patient-assistance program called Capital Blue Cross RxAid that helps eligible members eliminate or reduce their share for certain high-cost specialty drugs – like those used to treat cancer or rare conditions such as hemophilia; and a tool to give doctors real-time information about available drug options and a member’s specific pharmacy benefit, allowing them to compare exact out-of-pocket drug costs before writing a prescription,” the company statement said.

Haddock said Highmark works with a team of care managers such as dieticians and counselors to help patients navigate through their care, especially in cases where medications might not be readily available.

“For oncology patients, we connect patients with a care management team that helps them adhere to the prescribed plan and tracks reactions to medications,” Haddock said. “This is especially important with the high cost of those medications.”

Highmark bought a minority stake in Free Market Health, which is a company that uses new technology and data about Highmark members to match them to a specialty pharmacy that best meets their needs. It also can allow specialty pharmacies to bid for customers, allowing free market forces to drive down costs, according to Joe Cardosi, the CEO of Free Market Health.

“This provides benefits for the prescriber and simplifies preauthorization,” Haddock said.

“We contract with a broad range of networks and the cost of medications can differ based on the pharmacy used,” he said.

“Employers want their employees to be healthy,” Haddock said. “Cost can be a barrier, so we work with different programs so there is a plan in place to assist people with affordable medications.”

“We need to take a systemic look at what is driving these costs,” Stallings said. “Chronic illness is a major issue.”

Stallings said HAP has heard that some patients are hesitant to seek care because they are afraid they can’t afford the medications.

“It’s important to have these conversations,” she said. “I believe drug manufacturers wield a lot of power but policymakers can be tough so I think we will see changes at the state level.”

Stallings said more states are looking at the issue and HAP will be watching to see what progress is made.

“I would tell people to talk to their providers and write to their elected officials to ask why prices are climbing the way they are,” Stallings said.