Drug Costs Are Soaring

High cost drugs used to treat relatively few people suffering from complex conditions like anemia, cancer, hemophilia, multiple sclerosis, rheumatoid arthritis and human growth hormone deficiency are often the most expensive, costing thousands of dollars for each prescription.

Unfortunately, many folks with chronic diseases like these don’t realize the costs until they pick up their drugs at the pharmacy.

As reported in the New York Times on April 14, 2008, that’s what happened to Robert W. Banning of Arlington, Va., when his doctor prescribed Sprycel for his chronic myelogenous leukemia. The drug can block the growth of cancer cells, extending lives, but the tablet needs to be taken twice a day for the rest of Banning’s life.

Banning, 81, thought he had good insurance. But Sprycel costs more than $13,500 for a 90-day supply, and Banning soon discovered that his plan required him to pay more than $4,000. There is no generic version.
In order to save money, health insurance companies are following Medicare’s lead and rapidly adopting a new pricing system for very expensive drugs, asking patients to pay hundreds and even thousands of dollars for prescriptions medications that may save their lives or slow the progress of serious diseases.

With the new pricing system, insurers abandoned the traditional arrangement that has patients pay a fixed amount, such as $10, $20 or $30 for a prescription, no matter what the drug’s actual cost. Instead, they are charging patients a percentage of the cost of certain high-priced drugs, usually 20 to 33 percent, which can amount to thousands of dollars a month. These new pharmaceuticals are being categorized as either Tier 4 or Tier 5 drugs.

It is now estimated that because of the costs, 20 percent of Americans are not filling their prescriptions. If you narrow the survey to senior citizens, 50 percent are skipping these expensive drugs altogether. If you think that a drop in demand would lead to lowering costs, you’d be wrong. That’s why the free market doesn’t work in healthcare, because either you can pay me now or pay me later – you cannot say no to healthcare. Skipping critical medications only leads to sicker people with more expensive care down the road.

I have a bone to pick with the pharmaceutical pricing system. Thanks to the generosity of Congress – I’m talking about the Bayh/Dole and Hatch/Waxmam Acts – about a third of drugs marketed by the major pharmaceutical companies are now licensed from tax-payer supported universities and small biotech companies, and these tend to be the most innovative ones.

So, why do taxpayers have to pay so much money for these drugs? The expensive research and development is often accomplished with taxpayer-supported funds.

There’s something wrong here! Instead of lowering healthcare costs, these costs are shifted to the sickest of all.

Jeffrey Kreisberg blogs regularly at Taking Control of Your Healthcare.