A ARP PUBLIC POLICY INSTITUTE JUNE 2019 Rx Price Watch Rx Price Watch Report: Specialty Prescription Drug Prices Continue to Climb Stephen W. Schondelmeyer Leigh Purvis PRIME Institute, University of Minnesota AARP Public Policy Institute • Specialty drugs have never been precisely and been $29,843 in 2017—almost $50,000 lower—if consistently defined but generally include drugs the retail price changes for these products had used to treat complex, chronic conditions and been limited to general inflation between 2006 require special administration, handling, and and 2017. patient care management. Another notable characteristic is that they are among the most • In 2017, the average annual price of therapy for specialty prescription drugs was almost 12 times expensive drugs on the market, with prices that higher than the average annual price of therapy can reach hundreds of thousands of dollars per for brand name prescription drugs and over year. 215 times higher than the average annual price of • In 2017, retail prices for 97 widely used specialty therapy for generic prescription drugs. prescription drugs increased by an average of • Prescription drug price increases affect 7.0 percent. In contrast, the general inflation rate consumers, employers, private insurers, and was 2.1 percent over the same period. taxpayers who fund programs like Medicare and • The average annual cost for one specialty Medicaid. Spending increases driven by high medication used on a chronic basis was $78,781 in and growing drug prices will eventually affect all 2017. This cost was Americans in some way. — Almost $20,000 more than the median US — Those with private health insurance will household income ($60,336), pay higher premiums and cost sharing for their health care coverage. Over time, it — More than three times the median income for could also lead to higher taxes and/or cuts to Medicare beneficiaries ($26,200), and public programs to accommodate increased — Over four-and-a-half times higher than the government spending. average Social Security retirement benefit ($16,848). • If these trends continue, older Americans will be unable to afford the specialty prescription drugs • Notably, the average annual cost for one specialty that they need, leading to poorer health outcomes medication used on a chronic basis would have and higher health care costs in the future. A ARP PUBLIC POLICY INSTITUTE JUNE 2019 Average Annual Cost of Specialty Drugs Would Be Nearly $50,000 Lower if Retail Price Changes Were Limited to General Inflation Note: Calculations of the average annual specialty drug price change include the 61 drug products most widely used by older Americans for chronic conditions (see Appendix A). Source: Prepared by the AARP Public Policy Institute and the PRIME Institute, University of Minnesota, based on data from Truven Health MarketScan® Research Databases. Specialty Prescription Drug Prices Are Considerably Higher than Other Prescription Drug Prices © AARP PUBLIC POLICY INSTITUTE 601 E Street, NW Washington DC 20049 Follow us on Twitter @AARPpolicy on facebook.com/AARPpolicy www.aarp.org/ppi Full report available at http://www.aarp.org/ rxpricewatch Note: Calculations of average annual drug price of therapy included the drug For more reports from the Public Policy products most widely used by older Americans for chronic conditions: generic Institute, visit http://www.aarp.org/ppi/. drugs products (260), brand name drug products (214), and specialty drug products https://doi.org/10.26419/ppi.00073.002 (61). Source: Prepared by the AARP Public Policy Institute and the PRIME Institute, University of Minnesota, based on data from Truven Health MarketScan® Research Databases. 2