Specialty Drug Cost Increases Hit Record High


In 2015, specialty drug costs increased nearly 10%, the highest rate since 2006.

Drugs costs are a major concern for many Americans, especially elderly populations who require treatment with high priced specialty drugs for a number of conditions.

Retail prices for both specialty and generic drugs were found to increase significantly between 2014 and 2015, according to a pair of reports released for the AARP Public Policy Institute.

In the first report, the authors explored the costs for 101 drugs used to treat specialty conditions. Specialty drugs are highly-complex and require specific handling and storage guidelines. Specialty conditions, such as multiple sclerosis, rheumatoid arthritis, and cancer, are common among elderly patients, including those with fixed incomes.

Prices for specialty drugs were found to increase an average of 9.6% between 2014 and 2015, which was the highest increase observed since 2006, according to the study. In 2014, the average price hike was 8.9%.

The AARP reports that the average cost of treatment with a single specialty drug was $52,486 in 2015. This cost is 3 times higher than the average Social Security retirement, which is $16,101, and twice the income for a Medicare beneficiary, which is $25,150.

Notably, the average cost for a specialty drug used to treat a chronic condition increased by nearly $35,000 between 2006 and 2015, according to the study.

The yearly cost for specialty drugs was 9 times higher compared with other branded drugs, while specialty drug costs were 100 times higher than the yearly cost for generic drugs.

The authors noted that they excluded 1 specialty drug due to a price surge of more than 1300, which distorted overall trends.

In the second report, the authors explored cost increases for commonly-used generic drugs. The investigators found that generic drug costs were decreasing overall, but 11% had price increases, with some seeing more than 100% in growth.

The authors also found that the annual cost for 1 generic drug was only $523, a significant difference compared with specialty drugs. Additionally, the average annual cost of a generic drug in 2015 dropped nearly $200 compared with 2014, according to the study.

Additionally, the price for a widely-used generic diabetes drug exploded 450% in 2015, a move that may threaten access to medications.

All of the price increases for generic drugs were found to surpass the rate of general inflation in 2015 of 0.1%. The authors discovered that between 2010 and 2015, all 398 common generic drugs included in the study had at least 1 price increase, with some more than 100%.

The price of doxycycline hyclate, an antibiotic, skyrocketed more than 1000% during this time, which was the highest increase found in the study, according to the authors.

"Generics drugs currently account for almost nine out of 10 prescriptions filled at the pharmacy but only a quarter of total drug costs," said co-author Leigh Purvis, director of Health Services Research, AARP Public Policy Institute. "Given Americans' long-standing reliance on these products for savings—as well as recent price trends for brand name and specialty drugs—it is incredibly important that we identify and mitigate the factors behind recent generic drug price increases."

These reports highlight the importance of lowering drug costs, as the findings suggest that the cost of treatment with necessary specialty drugs may be out of reach for many older patients insured through Medicare, according to the AARP. Even generic drugs may post a challenge for this population, as costs for certain common drugs continue to climb.

"American families can't afford to keep paying for prescription drugs that cost more money than their salaries," said Debra Whitman, chief public policy officer at AARP. "These price increases are particularly hard on older adults, who take an average of 4.5 prescription drugs per month and often live on fixed incomes."

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