Crain’s Executive Insights: The Prescription Drug Cost Problem
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Michigan Association of Health Plans and Crain’s Content Studio hosted a virtual roundtable discussion featuring thought leaders from around the country. They explored why prescription drug prices continue to rise, policies being developed to alleviate the problem and why this matters to the business community.
The median launch price of a new medication increased more than 750 percent to $180,000 in 2021, from $2,100 in 2008, according to Harvard’s Brigham and Women’s Hospital researchers. And more than 45 percent of prescription drugs cost more than $150,000 in 2021, up from 9 percent in 2013.
Such dramatic rate hikes have made “prescription drugs increasingly unaffordable for Americans,” according to the Congress Committee on Oversight’s three-year investigation into the pharmaceutical industry.
Businesses large and small are taking the hit.
“Every time a premium goes up, a small business owner is making a decision on how to pay for that,” said Scott Lyon, senior vice president of the Small Business Association of Michigan. “Does it come out of current wages or wage increases? Have they reached the tipping point to where they can no longer afford insurance for their employees?”
Drew Gattine, a senior policy fellow at the National Academy of State Health Policy, said state legislatures have passed more than 200 bills since 2017 in an attempt to lower drug costs.
“Every single state now has tried to tackle this problem in some way,” he said.
Many efforts involve patient spending caps and increased regulation of pharmacy benefit managers (PBMs). However, those often result in cost-shifting rather than lower prices.
Gattine, Lyon and other industry experts recently joined the Michigan Association of Health Plans (MAHP) in a conversation to explore the root cause of exorbitant drug prices, what’s being done to control the costs and what needs to happen on legislative levels.back to blog