The pandemic will end, but another crisis awaits: drug costs
As President Joe Biden approaches his 100th day in office this week, it’s clear his administration’s main focus is ending the COVID-19 pandemic. But there’s another crisis mounting beneath the surface: the persistent unaffordability of prescription drugs.
The cost of retail prescription drugs increased by 5.7% in 2019, up from 3.8% in 2018, according to CMS, and costs are projected to increase by 31% between 2020 and 2025—reaching $471 billion. Meanwhile, the prices of highly utilized specialty drugs have been arbitrarily inflated over time by pharmaceutical manufacturers, and the specialty drug pipeline is only growing.
As a result, Americans now spend more than $1,200 per year on average for prescription drugs, more than any other country in the world.
The issue of rising drug costs isn’t new. Back in 2017, President Biden called drug prices “a problem,” and during his presidential campaign he pledged to “stand up to abuse of power by prescription drug corporations.” The president has bipartisan company on the issue both in Washington and in the states.
The bipartisan urgency to resolve this crisis is good news, because Americans quite literally cannot afford to wait any longer for solutions. A poll conducted by the Kaiser Family Foundation found that 1 in 4 Americans report trouble affording prescription drugs, and nearly 30% say they do not take medications as prescribed due to cost.
While the pandemic continues to take up much of the government’s focus, there are some promising innovations coming out of the private sector that can help to make prescription drugs more affordable.
At UnitedHealth Group, we’ve made a concerted effort to improve affordability and to protect consumers from rising drug prices and high out-of-pocket costs as part of our mission to help people live healthier lives and make the health system work better for everyone.
We’re already seeing results.
For example, our PreCheck MyScript tool provides more than 545,000 physicians with cost and coverage data at the point of care to help them find lower-priced appropriate drug options for their patients. The result of that increased transparency? An average of $225 in savings for consumers per prescription filled.
Meanwhile, pharmacy benefit managers across the country are providing discounts at the pharmacy counter, saving consumers up to $189 per medication annually.
And discount cards can provide up to 80% savings on retail prices for consumers.
While private-sector efforts are already making a difference, sensible public policies are needed to have bigger systemic impact. The good news is there are concrete steps policymakers can take. For example:
• Optimizing the use of pharmacy benefit manager tools and capabilities for all Medicaid prescriptions can save states and the federal government $112 billion over 10 years and slow the annual growth of drug prices.
• Establishing value-based arrangements for prescriptions drugs can lower consumer out-of-pocket costs by 28% overall—and as much as 90% on expensive drugs like immunomodulators.
• Administering specialty drugs outside the hospital—including in patients’ homes–can reduce healthcare costs by as much as $37,000 per patient per year, improve patients’ physical and mental well-being, and reduce U.S. healthcare spending by $4 billion annually.
• Capping drug exclusivity could save Medicare more than $20 billion over 10 years by reducing prices by 27%, eliminating added costs to the healthcare system.
• Eliminating the rebate rule would make Medicare Part D more affordable. The rebate rule limits Part D plans and pharmacy benefit managers from negotiating lower drug costs on behalf of Part D enrollees. This rule needlessly raises Part D premiums by 25% and imposes nearly $200 billion in costs on taxpayers.
Rising prescription drug costs will remain a major headwind to Americans’ physical, mental and financial health unless the public and private sectors simultaneously work to rein in prices. This crisis was mounting well before the pandemic began—let’s not allow it to long outlast it, too.