According to a report from RAND, prescription drugs in the US cost 2.56 times more than drugs in other countries. The rise of specialty medications, price inflation, and favored use of brand-name prescriptions appear to be the primary drivers of increased pricing. The COVID-19 pandemic has also contributed to increased healthcare spending, with an approximate expenditure of $1.3 trillion on prescription drugs in the year 2020 alone.
1 in 4 Americans are already struggling to afford the medication they need, yet rates are expected to rise by about 3% to 6% every year. Drug prices have risen faster than any other medical goods or services.
"The COVID-19 pandemic has contributed to increased healthcare spending, with an approximate expenditure of $1.3 trillion on prescription drugs in the year 2020 alone."
There are several factors that come into play when we discuss the rising prescription costs, and some of them include:
In the case of most prescription drugs out there, you can’t find any competition for the drugs created by a certain major pharma company. This means that they have full control over the regulation and pricing of the drug, and patients must bear the brunt of this market monopoly.
Lack of Transparency
Insurance companies typically negotiate fixed-cost copays for patients and pharmacy benefit managers, leaving patients with no transparency on actual drug costs and an inability to negotiate pricing. For example, the cost of the diabetes medication Victoza rose 42% in 5 years despite being in the market for years. Without any insight into the price increase, patients are forced to cover the increased cost to control their diabetes.
The Effect of COVID-19 on Drug Prices
COVID-19 peaked the demand for prescription drugs, vaccines, and other medical equipment. Due to this sharp increase in demand, drug prices have been also increased as pharmaceutical companies try to curb the shortage. Another major reason for this effect is that there is also a shortage of active ingredients needed for developing some prescription drugs.
What’s Being Done?
Last month, President Biden stated that Medicare should have the ability to negotiate lower drug costs and that pharmaceutical companies should be facing penalties if they opt to raise drug prices faster than inflation. The proposal would bring down costs for both the federal government and for all consumers. In a poll by the Kaiser Family Foundation, 85% of Americans are in favor of allowing the government to negotiate prices with pharmaceuticals companies and to use those prices as a reference for consumer pricing as well.
While similar conversations have been ongoing for years, policymakers have yet to come to a decision. Amid the price increase, Americans are forced to choose between the medications they need and other basic life necessities as policy discussions continue.
Achieving Greater Cost Savings for Prescriptions
No patient should go without the medications they need because of the high-cost of prescriptions. With TouchCare’s service, RxCare, we’re committed to finding the most affordable options for you and your family. In just 15 minutes, we can provide you with multiple options for finding the most affordable drugs. From exploring options around generic alternatives to pill splitting, and other alternatives, we want to ensure that our members get access to the prescriptions they need and save money in the process. Click here to learn more.