Out-of-Pocket Costs for Brand-Name Medications Increased 15%

JAMA Network Open study found that change in brand-name medication prices for most commercially insured patients correlated with changes in out-of-pocket costs.

In the study, nearly 53.7 percent of patients paid drug deductible or coinsurance. In that same group of individuals, out-of-pocket costs increased when manufacturers increased list prices. 

Researchers looked at a cohort study of 79 brand-name drugs with available pricing data from January 2015 to December 2017. The data was obtained from the national commercial insurance claims database.

They looked to examine whether price changes for brand-name drugs are correlated with changes in patient out-of-pocket spending and whether this association varies by insurance benefit design.

Overall, median out-of-pocket spending increased by 15 percent for commercially insured patients. And changes were correlated with changes in list prices but not net prices, researchers explained. 

Among the 79 drugs studied, median list price increases were 16.7 percent. Specifically, per 30-day supply, drug prices increased from $333 in 2015 to $386 in 2017. 

Additionally, the median net price increase was 3.5 percent. And drug prices per 30-day drug supply were $173 in 2015 and $166 in 2017. 

During the study period, net prices decreased for 21 drugs and increased for 58 drugs. 

Additionally, list prices increased for all but four drugs. Each of these four drugs had a 3.3 percent decrease in price from 2015 to 2017, which was related to inflation.

“Some commercially insured patients who pay only prescription drug copayments appear to be insulated from increases in drug prices. However, more than half of patients pay deductibles or coinsurance and may experience substantial increases in out-of-pocket spending when drug prices increase,” researchers explained. 

“Among these patients, there was no evidence that manufacturer rebates to insurers are associated with patients’ out-of-pocket spending. Policies to rein in unregulated annual increases in list prices for brand-name drugs may have important consequences for patient out-of-pocket spending,” they continued. 

An August 2020 analysis found that patients with deductibles and coinsurance for brand medicines have significantly higher annual out-of-pocket costs than patients with fixed copays alone. 

The analysis conducted by IQVIA for PhRMA found that patients with copays pay a fixed amount for each prescription, while those with coinsurance pay a percentage of the medicine’s total price.

PhRMA leveraged IQVIA’s US market access strategy and consulting team to analyze trends in out-of-pocket costs between 2015 and 2019 for commercially insured patients across multiple therapy areas. 

Both deductibles and coinsurance spending accounted for over two-thirds of patients’ total out-of-pocket spending for five of the seven areas examined. These areas included anticoagulants, asthma, depression, diabetes, and human immunodeficiency virus.  

In the JAMA Network Open study, researchers explained that earlier studies of the association between changes in drug prices and out-of-pocket costs have mixed results. 

But the recent study findings suggest that the association between the two is influenced by insurance benefit design. Flat copayments protect patients from increasing list prices, while coinsurance and deductibles expose patients to these price increases.

Researchers emphasized that policy makers seeking to limit price increases among brand-name drugs should consider how any proposed policies affect patient out-of-pocket spending.

“Tying patient out-of-pocket costs directly to the price of a drug can encourage patients to use less costly medications, and completely detaching patient expenses from drug prices could ultimately lead to higher premiums,” researchers said.

“However, the parallel unfettered increases in list prices for brand-name drugs and greater reliance by insurers on deductibles and coinsurance have placed important financial burdens on patients using high-cost brand-name medications,” they continued.