Small price increases still matter
Although small, many of the drug price hikes earlier this year still exceeded the rate of inflation, which the paper said was 2.7%. Latest information from the Bureau of Labor Statistics. And that means penalties in Medicaid and other programs will be triggered.
But companies are raising prices above inflation anyway.
“To me, it means that we’re acknowledging through our actions that there’s a lot of money to be made outside of government programs, so it’s worth paying the fees and penalties,” Ciaccia says.
meanwhile New report from AARP It shows that small increases can add up over the life of a drug. The organization found that for the top 25 drugs in Medicare Part D, the average price increase over the life of the drug was 98%. This means that the price of the drug has almost doubled.
Consumers can pay more or less.
If your insurance doesn’t cover the medicine you need, you’ll end up paying more.
If your drug is covered, you may not have to pay the full sticker price, but your copay may be paid at the pharmacy counter or through coinsurance. This amount is often tied to the drug’s list price, so the higher the price, the higher your out-of-pocket costs may be.
But another possibility has to do with the complex health care system and its incentives. In some cases, higher prices mean more leeway for drug companies to negotiate deep discounts and rebates with health plans. And that incentive can put the drug in a better position, or tier, on the formulary, the menu of drugs that health insurance pays for. Top-rated drugs often have the lowest out-of-pocket costs.
“List price increases may therefore paradoxically lead to better access to formularies because of the large rebates associated with them,” he says. Amet Sarpatwari He is a professor at Harvard Medical School, where his research focuses on the impact of law and regulation on pharmaceuticals and public health.
For consumers, this means that even if the list price has increased, the cost of the drug may be lower due to lower out-of-pocket costs.
Some prices have dropped
Some medicines have been reduced in price.
The most notable decrease was in the type 2 diabetes drug Januvia. It was down 42%, which Ciaccia and Sarpatwari both told me was puzzling.
“That wasn’t on the bingo card,” Ciaccia says.
Januvia is one of them. 10 drugs whose prices were negotiated under Medicare This is a first under the Biden administration as a result of the Inflation Control Act. However, the newly reduced Medicare prices will not take effect until January 2026.
Merck said it did not negotiate the price down, but hoped it would be closer to the price paid for the insurance plan after discounts and rebates.
Only time will tell how that new price will impact consumers in a complex healthcare system.