For some, prescription drug costs outpace household income

An estimated 576,000 Americans spent more than the median household income on prescription medications in 2014, growing 63 percent from 2013. In addition, the population of patients with prescription medicine costs of $100,000 or more tripled in size from 47,000 to 140,000 individuals. According to pharmacy benefits manager Express Scripts, the total cost to payers from these patient populations would amount to $52 billion a year.

Dr. Glen Stettin, senior vice president of clinical, research and new solutions at Express Scripts, noted in the report that the “rapid growth in the population of patients with extremely high medication costs threatens the affordability of medical coverage for all beneficiaries and their plan sponsors.”

Insurers coverage

Of the patients spending more than $100,000 per year in prescriptions, at least one-third were treated for 10 conditions and more than 60 percent were on regimens of at least 10 different prescription medicines. The most common co-morbidities included high blood pressure, high cholesterol, diabetes and depression.

Individuals, however, are almost never bearing these high costs as insurance plans covered more than 98 percent of the costs for patients whose drugs cost $100,000 or more in 2014. Over the whole range of costs, patients in 2014 paid an average of 13.5 percent of their total medication costs, down from 14.9 percent in 2013.

For the high-spending individuals, specialty, made-to-order drugs in compounded therapies, as well as drugs for hepatitis C and cancer treatment accounted for two-thirds of the costs. The costs for these compounded medications increased 1,032 percent, from $12.6 million in 2013 to $142.1 million 2014. The costs are driven by the latest biologic medicines, which are extremely effective, but cost-prohibitive. For instance, Gilead Science’s hepatitis C drug Sovaldi® costs $84,000 for a three-month drug course.

Addressing high costs for pharmaceuticals, Sections 7001 through 7003 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) implemented an abbreviated biologics licensure pathway for drugs on patent such as Solvadi. The Biologics Price Competition and Innovation Act of 2009 (BPCIA) was to allow an expedited process for the approval of biosimilars when the FDA finds that standards for safety, risk mitigation, and clinical effectiveness have been met.

Medicare and Medicaid

Beyond the cost to insurers, the increase in the population of patients with extremely high drug costs was significant for Medicare and Medicaid, too. Although only 1 in 200 Medicare beneficiaries and 1 in 1,000 Medicaid beneficiaries had prescription drug costs greater than $50,000 in 2014, these rates were 63 percent and 100 percent higher, respectively, than 2013 numbers.