Special investigation from Consumer Reports Best Buy Drugs explains rampant rise in drug costs. Plus, what consumers can do.
Last year, the (former) CEO of Turing Pharmaceuticals Martin Shkreli made headlines as “the most hated man in America” when he raised the price of Daraprim, a drug crucial to many HIV/AIDs and cancer sufferers, from $13.50 to $750 a pill. Shkreli’s actions may have been devious and high-profile, but they were far from unusual. In the wake of the Daraprim outrage, Americans were left with many unanswered questions: how often is this happening? Who is this affecting? And how is this legal?
In a newly released investigation, Consumer Reports is seeking to answer those questions. CR’s new findings from a nationally representative poll paint a truly sobering picture of the impact that a fluxing pharmaceutical market has on the lives of many Americans–32 million in fact, in the last twelve months. CR found that those consumers facing increases in their prescription costs were more likely to economize in possibly dangerous ways to their health, such as putting off doctor’s visits, declining medical tests or procedures, or not filling their prescriptions at all. Even outside of the medical sphere, those fighting price hikes were more likely to compromise in their everyday lives, postponing bills, relying on credit, and spending less on entertainment, family, and even groceries.
After intensive investigation into the driving forces behind drug pricing , CR uncovered five key reasons consumers are seeing their costs skyrocket:
- Drug companies can charge whatever they want. There is no governing body for commercial and Medicare plans that has the authority to dictate or restrict the price a pharmaceutical company can set for a drug. And typically, that authority also falls short when it comes to restricting price gouging. Drug companies make billions in extra profits just by raising the price of existing drugs–and for the most part, there’s no one to stop them.
- Insurance companies are also charging you more. Rising drug costs are more damaging to consumers when they are struggling for coverage. An increasing number of Americans are being bled dry out of pocket with high deductibles, increasing monthly premiums, and higher co-pays for drugs put on more expensive “tiers”. Americans without an insurance plan that can buffer the skyrocketing costs of some medications are going to have to make the hardest financial compromises.
- Old drugs are reformulated as costly new drugs. Rather than letting drug patents expire and becoming available as generics, it’s common practice for drug companies to simply reinvent an older drug for the sake of obtaining a new patent and two more decades of exclusivity–and profits.
- Generic drug shortages can trigger massive price increases. When too few companies are marketing the same generic, any shortages or issues with ingredients can, due to lack of competition, affect the entire U.S. supply–leading to massive price increases, and few alternatives.
- Specialty drugs are costing all of us. While super-expensive, specialty drugs account for less than 1% of all prescriptions, they represent a worrying one third of total drug spending by consumers, employers, and the government. And the threat is becoming more immediate: more than half of the 56 medications approved by the FDA in 2015 were specialty drugs.
So what’s a consumer to do, vulnerable to the whims of a market out of their control? Consumer Reports offers these tips to find the best deals:
- Talk to your doctor about the cost of the drug they are prescribing. Ask about generics, which can cost up to 90% less. If your insurance drops or reduces coverage of a drug, your doctor can help by appealing to your insurance company for an exception.
- Shop around and negotiate. CR’s secret shoppers have found that retail prices can vary widely, even within the same zip code.
- Check online (with caution). If you pay out of pocket, check GoodRx. See CR’s advice about using low-cost online pharmacies here.
- Choose a plan that covers the medications you need. Compare plans during your open enrollment period because coverage may change year to year.
“Pharma has a right to make a profit. But it also has a moral obligation to be transparent about its pricing.” –Wayne Riley, M.D., immediate past president of the American College of Physicians
For more in-depth coverage, be sure to read the CR’s comprehensive report here, and find it in the August 2016 issue of Consumer Reports magazine.