First, most people aren’t paying for expensive brands — through cost shifting they are bearing the brunt of paying full price for largely generic meds. That is starting to sting.
- 30% of Rx dispensed are free / no out of pocket to consumer
- 2.3% of Rx cost patient more than $50 per month — these are primarily cancer meds, MS, HIV, Hep C, and some new brands for various conditions
- The other 67% of Rx cost patients between $1–50 per month (63% of these meds are generics).
- The average price of a generic Rx is about $20 — not $5 or $6 like the cost of ibuprofen. That’s an average too — some people will pay $25, $30, or $40 per generic Rx (typically monthly too).
Second, in looking at the historical data on the percentage of healthcare costs that is Rx, drug costs jumped up to 8.8% of all costs by 2000. Today it sits at roughly 10.1% of all healthcare costs.
Third, according CBO forecasts, Medicare part D spending as % of all Medicare spending, will go from 13.6% to 14.7% by 2027 — far from a runaway train.
In fact, if a few simple steps were taken to increase pharmacy competition, it is feasible to reduce Part D costs by 10–15%, making Part D about 13.5% by 2027 — a slightly lower proportion of the costs than they are today.
Fourth, a lot of the increase in Rx spend will be in specialty type drugs that end-up affecting 1–3% of population. In these instances, they will increase total costs but patients end up having their exposure limited.
Yes it is true that new drugs enter the market and they are very expensive. With 100K price tags, these drugs make for great stories . And it’s true that many are not being prescribed on the basis of value. That can be fixed.
Fifth, what is most troubling is that when you step back and look at the big picture, hospital and doctor services are a much, much greater share of cost and not going down.
It may be possible that people are worried about more cost shifting in the future and that is why 56% of people identify rising drug costs as being one of the top 3 factors contributing to rising healthcare costs.
Lastly, it is interesting how the survey options were chosen. I didn’t see “hospital care”, “nursing homes”, or “home healthcare” as options. The truth is that hospital care represents the largest group of costs in our healthcare system — about 38% of all expenditures in 2015.
And the truth is that most people never really see the per night costs of a hospital stay. They don’t see cost breakdowns on all the doctors that billed insurance during their stay or all the per procedure costs (or even what procedures were done). Who knows if bandage was $2, $20, or $200 in the hospital. All people care about is “how much do I owe?” For most people, this is much more likely to hit them at the pharmacy every month, which definitely helps to explain the top ranking in this survey!