SALT LAKE CITY — Specialty drugs can be added to the list of costs that can price Americans out of taking care of their health, according to the AARP. In a new report, the senior-focused organization reported that the average yearly cost for specialty drugs is significantly greater than the U.S. median household income.
The average annual price for a specialty medication used on a chronic basis is almost $79,000, according to the AARP report, "Trends in Retail Prices of Specialty Prescription Drugs Widely Used by Older Americans: 2017 Year-End Update." That's nearly tripled since 2006, when average annual cost was not quite $28,000.
The specialty drug price report comes as officials are considering a host of medical costs that leave consumers with sticker shock. President Trump on Monday signed an executive order that requires hospitals to publish their prices so patients know what care in each facility costs, giving patients the opportunity and incentive to price compare.
"Hospitals will be required to publish prices that reflect what people pay for services," NPR quoted the president as saying after he made the announcement at the White House. "You will get great pricing. Prices will come down by numbers that you wouldn't believe. The cost of health care will go way, way down."
The AARP report defined specialty drugs as those "used to treat complex and chronic conditions; that require special administration and handling; or that require patient care management." It noted that specialty drugs also often treat illnesses that affect elderly populations, and that "they are among the most expensive drugs on the market."
The AARP report said the retail price of 97 specialty drugs is rising at an average of 7 percent a year, compared to an average general inflation rate of 2.1 percent. As a result, the average annual cost of a specialty drug in 2017 was:
- nearly $20,000 more than the median U.S. household income, which was $60,336;
- more than three times the median income of $26,200 for those on Medicare;
- and in excess of 4.5 times higher than the annual average Social Security retirement income, which is $16,848.
The high cost of specialty drugs impacts nearly everyone, the report said, not just the senior citizens for whom they are prescribed. Because insurance programs cover portions of the cost, "those with private health insurance will pay more in cost sharing and higher premiums for their health care coverage. In addition, increased government spending on prescription drugs (in programs like Medicare) will ultimately lead to higher taxes and/or cuts to public programs."
Had the cost of the medication risen only by the level of general inflation between 2006 and 2017, the average annual price for a specialty medication would be nearly $50,000 lower, at $29,843, said AARP.
“Prescription drugs are not affordable when their prices exceed the patient’s entire income,” said Debra Whitman, executive vice president and chief public policy officer at AARP, in a news release about the report. “Unfortunately, drug prices seem to be in a never-ending race to the top, leaving more and more people unable to afford the medications they need.”
Among other report highlights, it added that specialty medications were in excess of 215 times more costly than widely used generic drugs and nearly 12 times more expensive than widely used brand name drugs.
The biggest annual price increase among the 30 bestselling specialty drugs was a 21.4 percent leap for Revlimid, a cancer treatment manufactured by Celgene, from $203,928 in 2016 to $247,497 in 2017. Among all 97 of the most-often prescribed specialty drugs considered, the single highest retail price increase was for Revatio, a drug from Pfizer that treats pulmonary arterial hypertension, at 48 percent.
“Specialty drugs account for the majority of the prescription drugs that were approved by the FDA in recent years,” said Leigh Purvis, director of research at AARP Public Policy Institute. “Given the remarkably high prices associated with such products, it is imperative that policymakers finally enact meaningful changes that target drug manufacturers’ pricing behavior.”
Forbes contributor Patricia Barnes, an attorney and author, wrote this week that "an unprecedented number of older Americans are being driven into bankruptcy due, in part, to astronomical health care costs. Research shows the rate of U.S. citizens over the age of 65 who are filing for bankruptcy increased about 204 percent from 1991 to 2016. ... Older Americans report they are struggling with inadequate income and unmanageable costs of health care."31 comments on this story
But Barnes also suggests that AARP's ongoing concern about drug costs may also divert attention from a proposal by the Trump administration that's being backed by the Pharmaceutical Research and Manufacturers of America to "encourage insurers to pass prescription drug rebates through to seniors at the pharmacy counter, thereby helping to lower their out-of-pocket costs." Insurers and pharmacy benefit providers negotiate with drug companies for rebates they may not always pass directly to seniors.
Barnes notes that the proposal could "hit AARP in the pocketbook," as AARP sells a Medicare supplement and, like many insurers, may keep the rebates. Politico says AARP and the manufacturers association are fighting over that proposal.