A new AARP report shows that the rapid rise in cost of specialty drugs exceeds median family income.
If recent trends in specialty drug prices and related price increases continue unabated, an increasing number of consumers may be unable to afford necessary specialty medications.
That's according to a new AARP Public Policy Institute (PPI) report, which found that retail prices of widely used specialty prescription drugs are consistently increasing faster than the general inflation rate.
The report, the third in a series on prescription drug prices, examined the retail prices of 115 specialty prescription drugs most widely used by older Americans. The analysis included 47 different drug manufacturers and covered 30 different therapeutic categories.
In addition, the report found that the retail prices associated with these products now outstrip what many families earn in a year. In 2013, the average annual retail cost of prescription drug therapy for one specialty drug was $53,384 per year. This average annual cost was greater than the median U.S. household income ($52,250). It was also more than twice the median income for Medicare beneficiaries ($23,500) and almost three-and-a-half times higher than the average Social Security retirement benefit ($15,526) over the same time period.
“In 2013, the average annual cost for specialty prescription drugs was 18 times higher than the cost of brand name prescription drugs and 189 times higher than the cost of generic prescription drugs,” says Leigh Purvis, MPA, PPI director of health services research and co-author of the report.
“The high costs associated with specialty prescription drugs have important financial implications for the entire healthcare system and can make it extremely difficult for patients to afford the treatment they need to stay healthy,” she says.
Based on the report, Purvis offers these takeaways:
#1. Specialty drug prices are increasing rapidly.
#2. Specialty drug prices are becoming cost-prohibitive for many consumers, including those with health coverage.
#3. Until recently, relatively few patients used specialty drugs. However, there are strong indications that a much larger share of the population will use such products in the future.
#4. Spending increases driven by high and growing drug prices will affect all Americans in some way.
“AARP strongly believes that any policy solution must balance the need for innovation with protecting the health and financial security of consumers and taxpayer-funded programs such as Medicare and Medicaid,” Purvis says. “As far as specifics, we are strongly advocating for increasing the availability of comparative effectiveness research [CER]. Right now we have no way of knowing whether a new product is actually better than others that are already on the market. We think that CER-which is already being utilized in other countries like Germany and the U.K.-will finally start to introduce some meaningful, and much-needed, competition into the pharmaceutical market.”
AARP’s Public Policy Institute has been tracking price changes for widely used prescription drugs for more than a decade. The “Rx Price Watch” reports focus on price changes for three market baskets-brand, generic, and specialty drugs. In addition, a combined market basket (i.e., brand, generic, and specialty) allows the Institute to analyze the price change trend across all types of prescription drugs in the U.S. market.