Ed Schoonveld, a principal at the consultancy ZS Associates, said he was shocked by the drop in consumption and increase in mortality.
“This is certainly one reason we need to seriously consider the impact of copays,” he said.
The researchers focused on beneficiaries who fell into the Medicare Part D coverage gap known as the “donut hole,” where patients are responsible for the full cost of their drugs between certain spending thresholds. Legislative changes have incrementally narrowed that gap, which fully closed in 2020.
In an example in the working paper, a Medicare beneficiary paid 25% of the price of their branded drugs until they reached $2,510 in total annual out-of-pocket spending. The patient fell into the donut hole and had to pay for the full cost until they hit $5,726, after which they were responsible for a 5% copay.
Obermeyer was struck by the finding that the highest-risk patients were not filling their medication after prices jumped. Those most vulnerable to a heart-attack and stroke cut back more statins and antihypertensives than lower-risk patients—irrespective of socioeconomic status. The riskiest one-third of patients were 280.6% more likely to drop cardiovascular drugs than the bottom two-thirds; the researchers found similar results for those at high risk of diabetic and pulmonary complications.
Rather than cutting back on one or two drugs, there was a big cohort that stopped filling most it not all of their prescriptions as copays went up, Obermeyer said.
“That fact that this was also happening in high-income zip codes does fly in the face of the economics and research that people who need the prescription the most and can afford it should be the most likely to fill it,” he said.
Drug list prices continue to increase every year. As health insurers and employers pay more, they often pass those costs to consumers in the form of higher premiums, deductibles and copayments.
There were a record 832 drugs that experienced price increases in January—nearly 200 more than January 2020 and the highest since at least 2014, when GoodRx started tracking the data. All but 10 were branded drugs and 175 of those were specialty drugs, according to the report.
The list prices increased by an average 4.6% in January, spanning drugs that have continued to rise in price each year, said Tori Marsh, the author of the report and director of research for GoodRx, which a helps consumers find lower prices on medicines at pharmacies.
“This is largest amount we have seen in years,” she said. “Most list price increases end up trickling down to patients in the form of higher cash and net prices, which is especially important for those who have high deductibles and the uninsured. These price increases are very likely to block some patients from affording their medication, and can lead to lower adherence, higher downstream costs and higher comorbidity and mortality rates.”
Half of the medications that saw price hikes followed price increases in 2019 and 2020, according to the report. That includes widely used, expensive medications that have no cheaper generic alternatives including Humira, a biologic that treats rheumatoid arthritis and psoriasis. The list price has grown 21% from 2019 to 2021, which has helped AbbVie yield around $130 billion in sales from 2010 to 2019. The company holds dozens of patents for the drug granting it exclusive marketing privileges and a first biosimilar isn’t expected to hit the market until 2023.
GoodRx researchers expected price increases might slow due to the COVID-19 pandemic, but that didn’t happen, Marsh said.
“This was par for the course—it happens every January,” she said. “For many of these specialty drugs that don’t have generic alternatives, patients have had to prioritize rent or food over their medication or vise-versa. This puts them in quite a predicament, especially if they don’t have insurance or have a high-deductible plan.”
Nearly a third of America’s $3.8 trillion annual healthcare bill is related to inpatient care while pharmaceutical spending only accounts for about a tenth. Some have criticized the focus on drug prices given that dichotomy.
“Over the last 20 years, drugs have almost been at a constant 12% to 13% of total healthcare spending—they’re part of the problem but not the remaining 88%,” Schoonveld said. “We need a more holistic assessment, not just on drug costs alone.”
Still, each sector is interconnected. Some research has shown that higher out-of-pocket prescription costs, for instance, can deter spending on other healthcare services like physician visits. If a patient forgoes a regular checkup and misses early signs of a disease, that could lead to more expensive hospital admissions and outcomes could suffer.
Thus, there needs to be a more holistic view of U.S. healthcare spending, industry observers said.
“It is odd that we treat all healthcare costs the same way,” Obermeyer said.
When it comes to drug spending, Congress has explored—to little avail—policies involving drug importation, allowing Medicare to negotiate with drugmakers, outcomes-based pricing and tying Medicare drug prices to those in other wealthy countries.
While there has been some pricing manipulation, breakthrough drugs are going to continue to demand a high price, Schoonveld said, adding that the prices are bound to go down as more competitors enter the market. In the meantime, payers and providers need to work together to analyze the long-term data on drug treatments and related outcomes, he said.
“If there is a treatment that costs $100,000 a year, you need to make sure it is covered in an appropriate way,” Schoonveld said. “As a society we need to make sure we have the right kind of insurance elements so patients are not faced with an impossible decision.”
Obermeyer and his co-authors Harvard economist Amitabh Chandra and Harvard research assistant Evan Flack proposed increasing or decreasing copays based on efficacy to increase adherence and reduce disparities. Patients could be steered toward more effective treatments in a value-based insurance design where proven treatments like anti-hypertensives are given zero or even negative copays while treatment with ambiguous benefits like proton pump inhibitors are assigned high copays, they said.
“We pay a lot of attention to healthcare costs, which is why we have all these cost-sharing schemes,” Obermeyer said. “They are put in place to improve the efficiency of healthcare by empowering people to be educated consumers, but this study shows that is not the case.”