The price of prescription drugs has been a well-known issue for decades. In recent months, however, the price of specialty drugs in particular has received increased attention on social media and from the mainstream media and candidates for President. Much of this attention focused on Turing Pharmaceuticals’ 5,000% price increase for Daraprim last month, but the cost of specialty drugs has been trending upwards for years.
According to Business Insurance magazine, group health plans’ specialty drug costs are projected to equal traditional prescription drugs by 2018. In 2012, specialty drugs accounted for only 30% of group health plan drug spending. Last year, 23% of employers attributed more than half of their drug costs to specialty drugs, up from 2% in 2013. One heavily advertised specialty drug, Humira, costs more than $39,000 per year on average.
On Tuesday, Democratic presidential candidate Hillary Clinton announced a plan to address drug costs. The plan includes requiring drug companies to reinvest profits into research and limiting the amount people with chronic health conditions can be required to pay for the drugs. It also calls for allowing Medicare to negotiate lower drug costs, a move favored by 83% of Americans according to an August survey by the Kaiser Family Foundation.
Clinton’s proposals were met with skepticism by many in the insurance and pharmaceutical industry. PhRMA President and CEO John Castellani said the proposal would “turn back the clock on medical innovation” and restrict patients’ access to medications. Former CMS Administrator and current AHIP CEO Marilyn Tavenner indicated the insurance industry could support efforts to increase transparency in drug pricing, but not limits on out-of-pocket costs. Increased transparency was also endorsed by AARP’s Director of Health Services, Leigh Purvis. On the other hand, the CEO of the Generic Pharmaceutical Association appeared to endorse increased government intervention in drug pricing.
Biotechnology stocks dipped by 4% after Clinton’s announcement, but analysts at Raymond James believe the sector is still on track for continued growth. Aon Hewitt expects overall pharmacy cost trends to increase by 10% this year, driven by price inflation – including a 22.7% rise in the cost of specialty drugs.