Is There an End in Sight to Rising Prescription Drug Prices?

Topics: Costs and Prices, Prescription Drugs

As prices for prescription drugs have skyrocketed, drugmakers have faced scrutiny from consumer advocates and lawmakers demanding increased transparency and lower costs. Several recent polls show that the issue is on the minds of many U.S. residents, and it will likely play an influential role in the 2016 presidential election season. 

American Health Line staff writer Julia Haskins spoke with Bryan Birch -- CEO of prescription drug analytics and technology company Truveris -- to learn more about this complex issue. In part one of the conversation, Birch took us behind the scenes of drug pricing. Part two focuses on strategies for consumers to take when confronted with pricey, needed medications.

Question: What can consumers realistically do to take charge of prescription medication costs?

Bryan Birch: Where the market is moving in the United States is toward members paying more and more out of pocket for medical care, and that's certainly no exception as it relates to prescription drugs. And it's only going to shift even greater to the member.

The reason why I say that is because commercial markets have always followed the government in medical reimbursement, medical care and medical pricing. What the Affordable Care Act has done is really put cost shifting to the actual patient member at the forefront. And right now an average member in the United States pays about $1,200 out of their pocket in order to receive their medical care -- that's going up to about $2,000 in about 18 months.

Q: Tell me about Truveris' new app, OneRx, and how it's geared toward consumers.

Birch: What OneRx does is it helps them decide which medication they should be taking, what's the best price, whether they're covered in insurance or not. They can actually price back and forth as to what the best offering is. If a managed care company does not give access to a certain drug, OneRx will give them not only a discounted price on that drug, but will give them any manufacturer assistance to purchase the drug themselves. And that's where pharmaceutical manufacturers are reaching directly to the consumer and giving them value in order for them to afford the drug. OneRx aggregates all of that activity and puts it in the palm of your hand so you don't have to go searching for things.

It's just not a transparency tool, but it's also an access tool. And probably most impressively, you can look up your member out-of-pocket expense even before you leave the physician's office so you know that you can afford the medication.

Q: What other innovations have you seen that you believe are helping consumers better manage drug costs?

Birch: Not going by name, but basically anything that enables the consumer to understand what the costs are. And there's a lot of capital going into this area called digital health, which does a couple things: It eases administration, as well as provides transparency to cost.

There's a lot of activity in this space that is trying to help the consumer with their buying choices because even though we have insurance it doesn't mean we have a benefit. It's really turning into more like car insurance, where you have a $500 deductible, your car insurance is $1,000 a year. If you want to move your deductible to $3,000, your car insurance is $500 a year. And more and more people are moving to the $500 a year. They're still insuring for the catastrophic but they have a lot of these out-of-pocket expenses.

Based on our data, what we've seen is 70% of membership doesn't even reach their deductibles. That means they're shopping, they're doing something to really try to contain their own costs, and that's the true reason we came up with OneRx.

I cannot stress enough that the increased member expenses are going to finally put a magnifying glass on really large cost increases. And with the consumer being involved as heavily as they're going to be and as they are today. With the right tools, there will be cooperation amongst manufacturers of drugs, amongst physicians and hospitals. As those types of tools come out in the market, it'll allow them to control their costs much more readily.

Q: Taking into account such innovations, would you ultimately say that consumers have reason to be hopeful about reining in some of these high drug costs?

Birch: That dynamic of [consumers making buying decisions] is now upon us and it's only going to get more powerful in years to come, so I would think that it would drive down the cost of care versus the other way around.

When you have insurance, you have clouded glasses on. When you have co-pays and the like you're just going for care, you're buying drugs, you're going to the doctor. But when it's coming out of your pocket, then you start shopping around. Is this drug at XYZ pharmacy $20 and over at another pharmacy it's $30? You don't necessarily care why, you're just going to get the one that's $20. And if you have a co-pay, it really masks that activity. It's not a pure competitive market. That's the one good thing about having member liability increases -- now we have to give them the tools to manage.

Q: In the future, do you see the high-cost drug playing field being leveled out?

Birch: There is a lot of innovation just in drugs in general. Pharma manufacturers will feel pressure from the consumers to try to get access to the drug and hopefully will add incentives in the market for the consumer actually to purchase their drug. So I think the whole environment's going to be competitive.  Even if it's a blockbuster drug, they'll have to remain competitive if the consumers are actually buying it.

This interview has been condensed for clarity and length.