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HIGH COST OF PRESCRIPTION DRUGS

 

 

 

PRESCRIPTION (RX) DRUG PRICES ARE OUT OF CONTROL IN THE US

 

•  2/3 of all US bankruptcies were tied to medical issues (>500,000/year) 

•  Americans spend an average of $1200/person/year on Rx drugs (not over the

counter drugs)

•  Majority of cost increases are due to raising the price of existing Rx’s, not new Rx

drugs

 

 

 

SCOPE OF THE PROBLEM

 

Prices in the US are far higher than in other OECD countries

 

•  Rx drugs account for— 

—20% of employer insurance benefits

—10% of TOTAL healthcare costs

•  US does NOT regulate Rx drug prices 

•  US Rx drug prices are 80%-150% more expensive than identical Rx in other

countries:  

—No single entity is responsible for price negotiation

—State Medicaid and multiple private insurers have no individual leverage and

the biggest player, Medicare, is prohibited by law from price negotiation

—US has no price controls like other countries

END RESULT is significantly higher US Rx drug prices on consumers

 

 

 

US RX DRUG PRICES ARE RISING FASTER THAN INFLATION (INCLUDING MEDICAL INFLATION

 

•  Per capita spending on Rx drugs:        1990 =  $266 

                                                                 2019 =  $1200

•  Five year changes in drug prices: 

—Common generic Rx down 37%

—Common branded Rx up 60%

—Specialty generic Rx  down 35%

—Specialty branded Rx up 57%

•  Causes of price growth: 

—New brand name Rx

—Large increases in existing Rx drug prices

—Reduced number of patent expirations

MEDICARE IS MAJOR PAYER FOR RX DRUGS

• Medicare is prohibited by law from Rx price negotiation (Medicare Part D law)

• Payer distribution:

—Medicare 30%

—Medicaid 10%

—Private 42%

—Out of pocket 14%

 

 

 

PATIENTS HAVE DIFFICULTY AFFORDING MANY RX DRUGS DESPITE INSURANCE

•  25% of patients have difficulty affording their Rx drugs

•  18% of US adults report skipping Rx due to cost (Canada=10%, UK=2%)

•  Not purchasing Rx or skipping doses is directly related to poor health outcomes

•  US DOES have poorer health outcomes than other OECD countries

•  We PAY MORE and GET LESS

 

 

 

 

REMEDIES FOR HIGH RX DRUG COSTS

 

 

ALLOW MEDICARE TO NEGOTIATE RX DRUG PRICES

•  HR3 allows HHS Secretary to negotiate prices on 250 Rx/year that have no competition

•  In one year Medicare could negotiate better prices on HALF of part D spending

•  In two years 100% of part D spending can be changed

•  HR3 makes Average International Market (AIM) price the ceiling for maximum US

price

 

CAP OUT OF POCKET COSTS ON RX DRUG SPENDING FOR MEDICARE

• Limit out of pocket spending to $2000/year for Medicare beneficiaries

• Currently there is NO cap on Medicare out of pocket spending

• 1/3 of US adults have rationed Rx doses, skipped doses, or failed to fill Rx because

of cost

 

REQUIRE PHARMA TO PAY REBATES TO MEDICARE IF RX PRICES INCREASE FASTER THAN INFLATION

•  Per AARP, annual average of Rx cost increased 58% from 2012-2017 (11.6%/year)

 

EXPAND ACCESS TO PROGRAMS REDUCING MEDICARE OUT OF POCKET COSTS

•  Raise income eligibility for seniors to qualify for Low Income Subsidies Program (LIS)

•  Raise income eligibility for Medicare Savings Program (MSP) which assists seniors

with out of pocket costs.

 

 

 

We have a bill passed by the House of Representatives that addresses all this and more. The GOP has let it languish in the Senate and Trump has said he will veto it —breaking his campaign promise to allow Rx drug price negotiation.