In recent years, specialty pharmaceuticals used to treat autoimmune diseases have skyrocketed in costs. Medications like adalimumab, etanercept and infliximab are among the top five prescription drugs in the United States. It is evident that there has been a lack of transparency in the specialty drug supply chain and drug prices. Without price regulation, many of these drugs have suffered from extreme price increases causing many patients and even the health care system to be impacted. 

From 2005 to 2015, pharmaceutical sales rose from $500 billion to $700 while at the same time profits have raised over 18 percent. In a study published by Health Affairs, researchers looked at a list of prices from both brand and generic drug names from 2005 to 2016. Newly developed drugs mostly accounted for the higher cost point, but older drugs had the biggest price difference.

Due to the rising costs, many patients are responsible for greater out-of-pocket costs. This, in turn, causes a greater financial burden on patients. Some patients may even decide to opt-out of taking their medications. For those with rheumatoid arthritis, forgoing prescription medication can cause pain, deformities, and damaged joints beyond repair.

Hospitals and health systems are also taking a hit from rising prices. From 2015 to 2017, total hospital and health system drug spending increased on average 18.5 percent from fiscal years 2015 to 2017. Growth in Medicare hospital payment rates and growth in general healthcare expenditures did not keep pace with the increases in inpatient and outpatient drug spending during this time period.

Overall medical inflation during this period was 6.4 percent, according to the study. Spending on outpatient drugs rose 28.7 percent, while inpatient drug spending rose 9.6 percent from 2015 to 2017.

While spending growth increased, hospitals were facing drug shortages––about 80 percent found it “extremely challenging to obtain drugs in short supply,” the report found.

The prices of some drugs from 2015 to 2017 fluctuated significantly more than others, largely due to market changes and competitors, including:

  • Activase, a drug used to treat heart attack (increased 18.8 percent)
  • Immunosuppressants (increased between 15 percent and 21 percent)
  • Hepatitis C drugs (price drop of 15 percent in 2017)

“While these examples address drugs with the highest total spend, there are many other drugs that are critical for patient care that have experienced price increases,” the report noted.

For example, the price of a common pain reliever, hydromorphone, more than doubled over the three-year period.

Budget impacts

When drug prices rise, hospitals have to manage their budgets for these changes. Those involved in bundled payments do not see immediate changes in CMS payments as a result of higher drug prices.

Roughly two-thirds of respondents in the study said drug price changes had a moderate or severe impact on their budgets. More than 15 percent of hospitals indicated their budgets were impacted “to a large extent.”

As a result, hospitals have had to take different approaches to control spending, including day-to-day operational shifts and system-wide strategies. For many, these efforts were ongoing and continuous.