Prices soar for some popular drugs despite insurer discounts

white and green pills

Three out of four medicines with $1 billion or more of yearly global sales increased prices by more than double the rate of inflation between 2009 and 2015, even when insurer- and pharmacy benefit manager-negotiated discounts were factored in, a Bloomberg analysis shows.

Insurers can easily require patients to switch to alternatives, the analysis notes, giving them leverage to negotiate lower prices.

But drug costs are still putting significant pressure on payers’ margins, rising from less than 10 percent of care-cost expenditures years ago to 13 percent in 2010 and 17 percent in 2015. Insurers and state lawmakers have tried pushing back, with Virginia among several states trying to legislate better price transparency. Insurers also are experimenting with negotiating deals with drug manufacturers that link prices to how well the drugs work.

Bloomberg looked at 39 drugs for its analysis. Only six increased in price at the rate of inflation or below, the news agency found. Discounted prices rose significantly as well. The discounted prices for 27 of the 39 drugs rose by 25 percent or more over six years; the consumer price index rose just 9.5 percent during the same period, according to the article. Prices doubled or more for seven drugs.

Among other findings:

  • Pharmaceutical companies provided rebates of just under 20 percent in 2015 for cancer treatments, “a class of pricey drugs for which insurers are reluctant to limit coverage,” but averaged more than 50 percent for certain diabetes drugs that face considerable competition and insurer restrictions.
  • Drugs for which prices more than doubled included Humira, Enbrel, Vytorin and Viagra

The Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovation Organization criticized the analysis for cherry-picking drugs and ignoring the impact of competition from generics. Prescription drug prices are growing at rates similar to other healthcare sectors, PhRMA told Bloomberg.

The findings come a few weeks after Reuters reported that prices for four of the 10 most popular specialty drugs more than doubled over the past five years. However, a study released last year found that the average net price for drug brands already in the market increased just 2.8 percent in 2015, down from 5.1 percent in 2014. The report credited, in part, "more aggressive efforts by health plans and pharmacy benefit managers to limit price growth."

- read the Bloomberg article