Dan O’Connell was paying $5 a month for 60 tablets of a generic
medication when the price suddenly jumped to $103 for 90 tablets of the
same drug.
Price hikes like that have been occurring more and more for medications, all as insurance premiums and cost-sharing are increasing for many Americans too.
“Stuff keeps going up and your Social Security check doesn’t go up,” said the 78-year-old retired hospital administrator from Greenville. “A lot of people can’t afford it.”
Many have a hard time managing the prices of some life-saving medications, too, which can cost thousands of dollars, such as a hepatitis C medicine that costs more than $1,000 a pill.
Add in former Turing Pharmaceutical CEO Martin Shkreli’s now infamous 5,000-percent price hike for an important generic drug and consumers everywhere are crying foul.
Even Congress is holding hearings on drug prices.
Three in four Americans say prescription drug prices are unreasonable and one in four hasn’t filled a prescription because of the cost, according to a nationwide coalition of groups known as the Campaign for Sustainable Rx Pricing, which is calling for reform of the country’s drug pricing system.
AARP, with nearly 38 million members nationwide, is the latest to join the campaign — a project of the National Coalition on Health Care, which represents more than 80 organizations, including businesses, unions, health care providers, faith-based associations, insurers and consumer groups.
“I am glad to see AARP adding its muscle in the fight to combat unsustainable drug price increases,” said Teresa Arnold, AARP South Carolina state director.
“I am really worried about drug prices going up so dramatically,” she added, “and in South Carolina, folks with a modest retirement income could be adversely affected.”
Increasing concerns
John Rother, executive director of the coalition, said studies show double-digit increases in drug costs even though the overall inflation rate is low — less than 2 percent, according to the U.S. Bureau of Labor Statistics.
There's been a wave of expensive new drugs coming out, called specialty drugs, which can cost many thousands of dollars for a course of treatment, he told The Greenville News.
Specialty drugs comprised 37 percent of drug expenditures in 2015 and are projected to reach 50 percent by 2018, according to pharmacy benefits manager Express Scripts. Brand name drugs increased 164 percent between 2008 and 2015, the group reported.
The price of older drugs is going up too, not as dramatically, but frequently, which compounds over time, Rother said. And generics are posing another problem, he said.
“When you get to where only one manufacturer is left, they feel they can jump the price with no competition,” he said. “And these increases are not 5- or 6-percent. They’re often double or triple overnight. That’s price gouging.”
For example, according to the campaign, the price of Humulin R U-500 insulin jumped more than 350 percent from $12.01 to $54.48 per milliliter between 2007 and 2014.
A new AARP report looking at 622 drugs commonly used by older Americans showed that retail prescription prices are growing at a rate six times faster than inflation.
According to the report, the average annual increase in retail prices was 9.7 percent compared with an inflation rate of 1.5 percent in 2013, while the average annual increase for brand name drugs was 12.9 percent and the increase for specialty drugs was 10.6 percent.
“High and growing prescription drug prices are making it increasingly difficult — if not impossible — for older Americans to access the drugs that they need to get and stay healthy,” said Leigh Purvis, director of health services research with AARP’s Public Policy Institute.
“Many Medicare beneficiaries live on modest fixed incomes and simply do not have the resources to absorb the costs associated with expensive prescription drugs,” she added. “Prescription drug prices also have serious financial implications for taxpayer-funded programs like Medicare, which is spending tens of billions of dollars on these products every year.
“Overall, these trends are simply unsustainable for consumers, employers, and taxpayers, as well as the entire health care system.”
Bitter pill
And although senior citizens may be hit hardest, the situation affects all Americans, according to AARP.
The U.S. Department of Health and Human Services said this month that the rising cost of prescriptions is straining both public and family budgets.
The U.S. spent about $457 billion on prescription drugs last year, or about 17 percent of the $2.7 trillion spend on health care, according to the report, which says that price hikes contribute more to the growth in spending than the growth in volume of prescriptions does.
Drug spending rose 12.6 percent in 2014, and is poised to hit $535 billion in 2018, the agency reported.
And spending on specialty drugs grew from $14.5 billion in 2009 to $27.1 billion in 2015, an average annual growth of 11 percent, according to the report.
“The number of prescriptions is rising, but the majority of the growth in retail drug spending appears to be related to rising prices and changes in the composition of drugs prescribed — e.g., a general shift toward more expensive prescriptions — rather than changes in the total quantity of prescriptions,” the report concluded.
The Pharmaceutical Research and Manufacturers of America, the trade group for drug companies, says many factors contribute to prices, including the number of new medicines approved and how many lose patent protection. Between 2009 and 2013, for example, more than $105 billion in brand name drugs faced generic competition.
The group adds that drug prices are reasonable given their value to society and the cost to research and develop them.
“New medicines are transforming care for patients fighting debilitating diseases like cancer, hepatitis C, high cholesterol and more,” spokeswoman Holly Campbell said.
“With that said, we recognize that too often patients struggle with access to their medicines at the pharmacy,” she added. "There also needs to be a greater focus on the critical challenge facing patients: increasingly high cost sharing and additional restrictions on access as a result of their health insurance coverage."
Drug company patient assistance programs may help some of those patients, she said.
Campbell also said that the share of spending on retail drugs is what it was 50 years ago in spite of specialty drugs, and that focusing on list prices ignores the discounts negotiated by insurers and pharmacy benefit managers.
“Just last month, CVS Health reported their spending on prescription medicines rose just 5 percent last year, in part because of aggressive negotiations with manufacturers,” she said. “These announcements are evidence of the significant leverage large powerful purchasers have in negotiations with manufacturers, including the ability to demand significant discounts and rebates, establish formularies and incentivize patients to use lower-cost generic alternatives.”
Bargaining power
But Rother said that stories of hardships related to drug prices are fueling bipartisan anger at the industry, and at Congress for letting it happen.
Other countries sell the same drugs at much lower prices because they negotiate prices with the pharmaceutical companies, he said. The U.S. should do that too, he said.
“We’re the only country where this is going on because we don’t regulate (the pharmaceutical industry) or bargain with drug companies,” he said. “They can charge whatever they want. And some members of Congress ... are characterizing it as unethical.”
While no legislation has been introduced so far, Rother said the pressure is building on Congress to act, though it may have to wait until after the fall elections.
Some are calling on drug companies to disclose what they spend on research and development, according to AARP, and on the government to allow Medicare to negotiate lower drug prices.
“The voter outrage on this is bipartisan,” Rother said. “The pharmaceutical lobby, which is very powerful and does give a lot of money to candidates, can’t just take for granted that Congress won’t do anything.”
Hospitals aren’t immune to the hikes either. The South Carolina Hospital Association is growing increasingly concerned about drug prices, said spokesman Schipp Ames.
“One of the great challenges for hospitals right now is the inability to predict prescription drug costs year-over-year, making it very difficult to budget in an industry that is already strained by financial unpredictability,” he said.
O’Connell said that some older people on fixed incomes skip their medications, only take them every other day or stop taking them all together because they still need to pay the bills and eat.
“It adds up after a while,” he said. “And everything else keeps going up too. I don’t know what you’re supposed to live on.”
Price hikes like that have been occurring more and more for medications, all as insurance premiums and cost-sharing are increasing for many Americans too.
“Stuff keeps going up and your Social Security check doesn’t go up,” said the 78-year-old retired hospital administrator from Greenville. “A lot of people can’t afford it.”
Many have a hard time managing the prices of some life-saving medications, too, which can cost thousands of dollars, such as a hepatitis C medicine that costs more than $1,000 a pill.
Add in former Turing Pharmaceutical CEO Martin Shkreli’s now infamous 5,000-percent price hike for an important generic drug and consumers everywhere are crying foul.
Even Congress is holding hearings on drug prices.
Three in four Americans say prescription drug prices are unreasonable and one in four hasn’t filled a prescription because of the cost, according to a nationwide coalition of groups known as the Campaign for Sustainable Rx Pricing, which is calling for reform of the country’s drug pricing system.
AARP, with nearly 38 million members nationwide, is the latest to join the campaign — a project of the National Coalition on Health Care, which represents more than 80 organizations, including businesses, unions, health care providers, faith-based associations, insurers and consumer groups.
“I am glad to see AARP adding its muscle in the fight to combat unsustainable drug price increases,” said Teresa Arnold, AARP South Carolina state director.
“I am really worried about drug prices going up so dramatically,” she added, “and in South Carolina, folks with a modest retirement income could be adversely affected.”
Increasing concerns
John Rother, executive director of the coalition, said studies show double-digit increases in drug costs even though the overall inflation rate is low — less than 2 percent, according to the U.S. Bureau of Labor Statistics.
There's been a wave of expensive new drugs coming out, called specialty drugs, which can cost many thousands of dollars for a course of treatment, he told The Greenville News.
Specialty drugs comprised 37 percent of drug expenditures in 2015 and are projected to reach 50 percent by 2018, according to pharmacy benefits manager Express Scripts. Brand name drugs increased 164 percent between 2008 and 2015, the group reported.
The price of older drugs is going up too, not as dramatically, but frequently, which compounds over time, Rother said. And generics are posing another problem, he said.
“When you get to where only one manufacturer is left, they feel they can jump the price with no competition,” he said. “And these increases are not 5- or 6-percent. They’re often double or triple overnight. That’s price gouging.”
For example, according to the campaign, the price of Humulin R U-500 insulin jumped more than 350 percent from $12.01 to $54.48 per milliliter between 2007 and 2014.
A new AARP report looking at 622 drugs commonly used by older Americans showed that retail prescription prices are growing at a rate six times faster than inflation.
According to the report, the average annual increase in retail prices was 9.7 percent compared with an inflation rate of 1.5 percent in 2013, while the average annual increase for brand name drugs was 12.9 percent and the increase for specialty drugs was 10.6 percent.
“High and growing prescription drug prices are making it increasingly difficult — if not impossible — for older Americans to access the drugs that they need to get and stay healthy,” said Leigh Purvis, director of health services research with AARP’s Public Policy Institute.
“Many Medicare beneficiaries live on modest fixed incomes and simply do not have the resources to absorb the costs associated with expensive prescription drugs,” she added. “Prescription drug prices also have serious financial implications for taxpayer-funded programs like Medicare, which is spending tens of billions of dollars on these products every year.
“Overall, these trends are simply unsustainable for consumers, employers, and taxpayers, as well as the entire health care system.”
Bitter pill
And although senior citizens may be hit hardest, the situation affects all Americans, according to AARP.
The U.S. Department of Health and Human Services said this month that the rising cost of prescriptions is straining both public and family budgets.
The U.S. spent about $457 billion on prescription drugs last year, or about 17 percent of the $2.7 trillion spend on health care, according to the report, which says that price hikes contribute more to the growth in spending than the growth in volume of prescriptions does.
Drug spending rose 12.6 percent in 2014, and is poised to hit $535 billion in 2018, the agency reported.
And spending on specialty drugs grew from $14.5 billion in 2009 to $27.1 billion in 2015, an average annual growth of 11 percent, according to the report.
“The number of prescriptions is rising, but the majority of the growth in retail drug spending appears to be related to rising prices and changes in the composition of drugs prescribed — e.g., a general shift toward more expensive prescriptions — rather than changes in the total quantity of prescriptions,” the report concluded.
The Pharmaceutical Research and Manufacturers of America, the trade group for drug companies, says many factors contribute to prices, including the number of new medicines approved and how many lose patent protection. Between 2009 and 2013, for example, more than $105 billion in brand name drugs faced generic competition.
The group adds that drug prices are reasonable given their value to society and the cost to research and develop them.
“New medicines are transforming care for patients fighting debilitating diseases like cancer, hepatitis C, high cholesterol and more,” spokeswoman Holly Campbell said.
“With that said, we recognize that too often patients struggle with access to their medicines at the pharmacy,” she added. "There also needs to be a greater focus on the critical challenge facing patients: increasingly high cost sharing and additional restrictions on access as a result of their health insurance coverage."
Drug company patient assistance programs may help some of those patients, she said.
Campbell also said that the share of spending on retail drugs is what it was 50 years ago in spite of specialty drugs, and that focusing on list prices ignores the discounts negotiated by insurers and pharmacy benefit managers.
“Just last month, CVS Health reported their spending on prescription medicines rose just 5 percent last year, in part because of aggressive negotiations with manufacturers,” she said. “These announcements are evidence of the significant leverage large powerful purchasers have in negotiations with manufacturers, including the ability to demand significant discounts and rebates, establish formularies and incentivize patients to use lower-cost generic alternatives.”
Bargaining power
But Rother said that stories of hardships related to drug prices are fueling bipartisan anger at the industry, and at Congress for letting it happen.
Other countries sell the same drugs at much lower prices because they negotiate prices with the pharmaceutical companies, he said. The U.S. should do that too, he said.
“We’re the only country where this is going on because we don’t regulate (the pharmaceutical industry) or bargain with drug companies,” he said. “They can charge whatever they want. And some members of Congress ... are characterizing it as unethical.”
While no legislation has been introduced so far, Rother said the pressure is building on Congress to act, though it may have to wait until after the fall elections.
Some are calling on drug companies to disclose what they spend on research and development, according to AARP, and on the government to allow Medicare to negotiate lower drug prices.
“The voter outrage on this is bipartisan,” Rother said. “The pharmaceutical lobby, which is very powerful and does give a lot of money to candidates, can’t just take for granted that Congress won’t do anything.”
Hospitals aren’t immune to the hikes either. The South Carolina Hospital Association is growing increasingly concerned about drug prices, said spokesman Schipp Ames.
“One of the great challenges for hospitals right now is the inability to predict prescription drug costs year-over-year, making it very difficult to budget in an industry that is already strained by financial unpredictability,” he said.
O’Connell said that some older people on fixed incomes skip their medications, only take them every other day or stop taking them all together because they still need to pay the bills and eat.
“It adds up after a while,” he said. “And everything else keeps going up too. I don’t know what you’re supposed to live on.”
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