Report: Some Prescription Drugs Now Cost More Than Household Incomes
Wonkblog's Carolyn Johnson noticed a study published this Friday that reached a rather shocking conclusion: The average annual retail cost of certain specialty pharmaceuticals now exceeds the median U.S. household income. These drugs are used to treat complex diseases such as multiple sclerosis, cancer and rheumatoid arthritis, according to the Post.
The study, published by AARP Public Policy Institute, illustrates how expensive some specialty drugs have become in just the last two years. They found that roughly 576,000 Americans spent more than the median household income on prescription medications in 2014—up a whopping 63% from 2013. In 2014, the last year for which data is available, median household income was $53,657. The number of patients with costs exceeding $100,000 a year nearly tripled in 2014 to 140,000. In total, the extra cost burden, according to the study, is about $52 billion annually.
Put plainly: certain life-saving drugs are rapidly getting obscenely expensive. Even though most people don't pay the full retail cost of drugs, as the Washington Post notes, the effects begin to add up:
A study this year by the pharmacy benefit company Express Scripts, for example, found that in 2014, patients whose pharmacy bills were more than $100,000 that year paid less than 2 percent of their costs—on average, $2,782 out of pocket. Insurance plans and employers shouldered the rest, although those costs are ultimately passed on to patients in the form of higher premiums.
Predictably, the makers of the drugs in question are pushing back against the study's findings. Holly Campbell, a spokesperson for the pharmaceutical trade group PhRMA, told the Washington Post that the study is flawed because it did not, "take into account the discounts and rebates that are applied to drugs through the negotiations between drug manufacturers."
A suprising two-thirds of drug spending for patients whose costs exceed $100,000 in 2014 was on medications that treat hepatitis C and cancer. You can see a comparison between how many people with certain illnesses spend more than $100,000 a year retail on specialty drugs versus those with the same ailments who do not spend this amount below:
h/t Washington Post