With expanded health insurance and Medicaid coverage under the Affordable Care Act, drug coverages will also increase, and unnecessary regulations will add to prescription drug costs, according to a new study from the National Center for Policy Analysis.
"Sixty percent of all Americans take a prescription drug in any given year, and nearly all seniors do," says NCPA Senior Fellow Devon Herrick. "Drug coverage is expanding rapidly and heightened regulatory scrutiny will prevent drug plans managers from holding down costs for consumers with programs such as creating exclusive networks and encouraging mail-order prescriptions."
A great number of barriers, regulations and practices preventing competitive bidding among drug plan stakeholders exist, Herrick says. In fact, there are state laws that constrain a drug plan's ability to create limited pharmacy networks, which reduce drug prices by bargaining with drug dispensers. Rather, any pharmacy can fill prescriptions. According to the Federal Trade Commission, this leads to higher drug prices and premiums.
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Herrick adds that although some drug plans encourage mail-order pharmacies with incentives, resulting in lower copays or refill limits, some states are creating laws to limit drug plans from providing lower prices for mail-order prescriptions in order to protect local pharmacies. In some cases, drug plan sponsors rely on formularies to choose appropriate drug therapies and discourage certain drugs while encouraging generics.
For state-managed plans, dispensing fees, such as counting tablets, filling bottles and administrative tasks, are pay higher compensation to pharmacies, Herrick says. In 2011, Americans filled approximately 3.8 billion retail prescriptions.
"Even though prescriptions can still be extremely expensive, drug therapy is arguably the most efficient method to treat many illnesses and often can prevent the need for more expensive surgeries and hospital stays," Herrick says. "Prices, profitability and services will continue to suffer unless open competition removes many of these barriers that will continue raising prescription costs."
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