Prescription medications account for 1 in 4 dollars spent by a commercial health plan

While the media often reports on the escalating price of individual prescription drugs, much less attention is given to overall national pharmaceutical spending—which may have more relevance for commercial payers.

While the media often reports on the escalating price of individual prescription drugs, much less attention is given to overall national pharmaceutical spending—which may have more relevance for commercial payers. Researchers examined annual health care spending for all fully covered subscribers under Harvard Pilgrim Health Care (HPHC) during a 6-year span ended in December 2016. From 2011–2016, HPHC's spending on pharmaceuticals rose from 20% to 25% of total spending on health care and from $81 to $101 per member per month (PMPM), even after rebates. Much of this gain can be attributed to higher prices for specialty medication, the out-of-pocket expense for which has more than doubled since 2011. In 2016 alone, average health plan PMPM outlays spiked 92%, from $18.72 to $35.85, for specialty medications. The increase for nonspecialty drugs, by comparison, was 4%. While the data was specific to HPHC, the investigators believe a similar trend is likely affecting other commercial insurers. To address the growing contribution of medications—specialty drugs, in particular—to total health care expenditures, the investigators recommend systemwide, coordinated strategies involving all stakeholders. These solutions, they say, must incentivize the development and licensing of high-value medications. In addition, it is critical to optimize prices, volumes, and choices of prescription drugs to promote high-value, sustainable, and equitable care across the board.