Commentary on Current Trends in Rising Drug Costs and Reimbursement Below Cost

To quantify prescription drug price increases over a span of 3 years (2012-2015), as well as extrapolate current reimbursement rates expected by independent retail pharmacies. In addition, we investigate potential reasons for these increasing drug costs.

Descriptive analysis.

National average drug acquisition costs (NADAC) data published by the Centers for Medicare & Medicaid Services were examined. Specifically, December 2012, 2013, and 2014, and July 2015 NADAC files were analyzed to identify generic and branded products with the highest percentage price increases. Percentage price differences were also calculated for 17 first-in-class drugs and their "me-too" competitors. The margin and margin percentage were calculated for claims adjudicated through four major payers.

The top 50 generic drug price increases ranged from 474% to over 18,000% from December 2012 to July 2015. The top 50 branded drug price increases ranged from 63% to 391% during the same time period. The percentage price difference for the first-in-class drugs versus their me-too analogues ranged from -2.3% to 61,259%. The margin for generic drug claims adjudicated ranged from -$237.11 to-$1,105.96. The margin for branded drug claims adjudicated ranged from $272.42 to $360.17.

Several potential reasons for the surge in prescription drug prices include manufacturer competition, industry consolidation, and capitalization on me-too drugs. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer. Although there are no immediate solutions, legislation regulating PBM functions and the use of therapeutic interchange programs may offer health plans some assistance in managing drug costs.