There’s no shortage of attention on rising pharmaceutical costs, but policymakers need to have the full picture of trends in this space to work off of, according to a new study.
Researchers at the Bureau of Economic Analysis wanted to account for the role the pharmacy benefit manager-negotiated rebates play in drug pricing trends. They compared claims data with rebate estimates from 2007 to 2020 and found that retail pharmacy prices increased by 9.1% each year.
Negotiated prices, however, instead grew by the more modest 4.3% per year, according to the study. In 2016, patient out-of-pocket spending also rose, while negotiated cost growth largely remained flat.
“Overall, the findings emphasize the importance of accurate measurement to inform policy discussions regarding prices in prescription drug markets,” the researchers wrote. “Given the data limitations, more work is needed to provide a complete and accurate picture of how pharmaceutical prices are changing in this sector of growing economic importance.”
The study notes that consumers are navigating a market where new products are becoming available with high list prices and high corresponding rebates. This means their out-of-pocket costs are rising while they have a limited view into rebates and other pricing negotiations behind the scenes.
The analysis found that the increase in out-of-pocket costs is likely attributable to growing deductibles and co-insurance, which are often set based on list price. Consumers with lower deductibles and capped copayments are more often shielded from these cost increases.
“This implies that consumers experience a heterogeneous cost burden, depending on their drug plan’s formulary structure,” the researchers wrote.
The study says these rising costs will likely disproportionately affect low-income individuals who choose high-deductible plans for the lower premium without necessarily planning for unexpected high costs, like those for a specialty pharmacy prescription.