Why Does Medicine Cost So Much? Here ’s How Drug Prices Are Set

From 2007 to 2016, Mylan raised the list price of its EpiPen about 500%, from just under $100 to more than $600. From 2002 to 2013, insulin prices more than tripled. From 2012 to 2019, the average price of AbbVie’s rheumatoid-arthritis drug Humira climbed from $19,000 a year to $60,000 a year—and that’s after rebates. These are dramatic examples of a systemwide problem: prices for brand-name drugs are rising at a rate that far outstrips inflation. What’s behind these rapid price hikes? It’s a simple question with a complicated answer that involves three central entities: drug manufacturers, pharmacy benefit managers (PBMs) and insurers. Together, they create a complicated supply chain that helps drive drug prices aggressively upward. “We have a system that is all engine and no brake,” said Michelle Mello, a professor at Stanford Law School and a professor of health research and policy at Stanford Medicine. The amount you pay for a brand-name drug will depend on your insurance plan; the plan’s formulary, or list of drugs it prefers and covers; the size of your deductible; and the deal your insurance company has worked out with the drug’s manufacturer, among dozens of other variables. How such discounts are negotiated is proprietary, carefully guarded by the system’s various players. There’s a lot of finger-pointing over who is to blame for rising prices, particularly between drug companies and PBMs, or the midd...
Source: TIME: Health - Category: Consumer Health News Authors: Tags: Uncategorized medicine Source Type: news