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Out-of-Pocket Costs for the Sickest Continue to Soar Despite a Dramatic Slowdown in Medicine Prices and Spending

Due to negotiations in the market, net prices for brand medicines grew just 0.3% in 2018, less than the rate of inflation.

But it often doesn’t feel that way for patients because insurers and pharmacy benefit managers have increasingly shifted more health care costs to patients through high deductibles and coinsurance.

In fact, over half of patients pay cost sharing based on the undiscounted list price of a medicine rather than the negotiated net price. And commercially insured patients with a deductible have seen their out-of-pocket costs for brand medicines increase 50% since 2014.

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How the Biopharmaceutical Supply Chain Shapes the Market for Medicines

Nearly half of spending on brand medicines went to the supply chain and other entities in 2018, and not to the biopharmaceutical companies that research, develop and manufacture the medicines.

Between 2015 and 2018, the amount innovative biopharmaceutical companies received from the sale of brand medicines increased, on average, 2.6% annually, in line with inflation. In this same timeframe, companies brought nearly 200 new innovative treatments and cures to patients.

And in 2019 alone, rebates and discounts given to insurance companies, the government, pharmacy benefit managers and other entities in the supply chain exceeded $175 billion and are growing every year. But these rebates and discounts are often not shared with patients at the pharmacy counter.

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Understanding the Drivers of Health Care Spending

Health care providers like doctors and nurses are there for patients at pivotal moments, but hospital administrators often take advantage of the system to pad their bottom lines at the expense of patients. In fact, hospitals are the largest share of health care spending in the United States and are a driver of higher cost sharing and premiums for patients across the country.

To fix our health care system, we need a robust discussion about the drivers of higher cost sharing and premiums for patients across the country.

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Fixing the Health Care System so It Works Better for Patients

We have a responsibility to not just develop treatments and cures, but to also help patients access them. That’s why we are making it easier for patients who are struggling to afford their medicines to find the robust patient assistance programs available to them. We are also working to fix the health care system so it works better for patients by making sure rebates and discounts are shared with patients at the pharmacy counter, eliminating barriers to innovative payment arrangements and making insurance work like insurance again.