It’s no surprise to anyone using prescription drugs: drug costs are up and you’re probably paying a lot more than you used to.
A study by IMS Health, a company that crunches data for healthcare companies, reports spending on medicines hit a record $425 billion last year. That’s a 12% increase over 2014 drug costs and the second double-digit hike in a row. Even after taking into account the rebates and other deals that some drug makers offer to some patients, Americans paid $310 billion for their drugs last year, up 8.5% over 2014.
Why? To begin with, there’s been a surge of new medicines and they’re expensive. Cancer drugs accounted for $39.1 of that $425 billion, an 18% jump. Drugs to treat autoimmune diseases, such as Rheumatoid Arthritis, Multiple Sclerosis, Lupus and Celiac Disease took a $30.2 billion bite, up 29%.
The report says that there’s also been a jump in the number of prescriptions that are being filled. That’s possibly due to a 20 million increase in the number of people with health insurance, brought about by the Affordable Care Act.
Though, for someone with drug insurance, the cost of filling a prescription for a generic drug has remained about $8 since 2010, the average cost of a brand-name prescription was $44 last year. That’s up more than 25 percent since 2010.
Something contributing to these higher out-of-pocket drug costs is an increase in the number of insurance plans that require deductibles, co-payments and/or co-insurance. (If you have a co-payment you to pay a fixed cost for a certain drug. With co-insurance you pay a percentage of the drug’s price). In response, the report says, drug makers are increasing their use of the coupons and other discounts, mentioned earlier in this story, to try to reduce what you actually wind up paying.
What does the future hold? The report forecasts a slowdown in what you pay. Though total drug costs after discounts are predicted to total $370-400 billion by 2020, the yearly growth rate is only expected to be 4-7 percent. That’s because those rebates and other price concessions are expected to significantly reduce the “sticker” price of many drugs.