Rising wholesale list prices for medications result in higher costs for patients and insurers

Patients are paying more out of pocket because of increases in wholesale list prices for medications, according to a recent study reported by JAMA Network Open. As a result, patients may be unable to afford their prescriptions, which can lead to negative health outcomes.

The median drug wholesale list price increased by 129% from 2010 to 2016, while median patient out-of-pocket costs increased by 53% and median insurance payments after rebates and discounts increased by 64%, researchers found.

Related: The gap between list prices and net prices for drugs is widening

Newly developed medications often are expected to be expensive because of high research and development costs, although there is debate about how to estimate these costs. Recent reports of substantial increases in list prices of drugs already on the market cannot be explained by development costs and have received considerable media attention and criticism from lawmakers, insurers and consumers. However, pharmaceutical industry leaders say that changes in wholesale list prices do not necessarily lead to large changes in the amounts patients or insurers pay for drugs. Manufacturers have said that increases in list prices are due to increases in discounts or rebates, not increases in actual amounts paid by patients and payers.

Increases in payments for specialty medications from 2010 to 2016 were greater than those for non-specialty medications in over the study period. Although patient out-of-pocket costs for drugs vary greatly, patients paid a median of 53% more for these drugs in 2016 than they did in 2010, after adjusting for general inflation. During the same period, median household income rose 8.6%, so these out-of-pocket costs have increased relative to income. This rise in patient out-of-pocket costs with increasing drug list prices is of particular concern to clinicians, because high drug costs can lead to poor drug regimen adherence; increased use of utilization management systems such as prior authorizations and step therapy; and adverse health outcomes.

Although patients paid a smaller percentage of the wholesale list price over time, the absolute amount that they paid for the drugs studied continued to increase at rates higher than general inflation or income growth, which may have important implications for the ever-larger population of patients with chronic diseases. Price increases in prices for drugs that have been on the market for several years increase the cost of treatment for patients.

“In this cross-sectional study, we found that increases in drug wholesale list prices are associated with increases in net patient out-of-pocket costs and insurer payments,” the writers of the study concluded. “This finding suggests that, although discounts and rebates significantly reduce the amount paid for drugs and have increased over the past several years, they have not prevented an inflation-adjusted rise in patients’ and insurers’ costs. This could have both important clinical implications for patient outcomes and an impact on total health-care expenditures.”

Read more: 

• Unsupported price increases netted drug manufacturers $5.1 billion
• How rebates blur the Medicare Part D price picture
• Express Scripts’ new formulary: A viable alternative to rebates or smoke and mirrors?