3 reasons prescription drugs cost so much

The Dayton Daily News has been digging into the complex system behind how prescription drugs get priced.

IN-DEPTH REPORT: Read and watch the full investigation

Here are three things we’ve learned:

1. Specialty drugs are life-saving, but high priced.

As health care has focused more on prevention, more new drugs are being developed each year. That includes hundreds of specialty drugs to treat rare diseases that never before had medication available.

But specialty drugs come with giant price tags due to a lack of competition, the cost of researching, developing and producing the drug and, some suspect, intentionally inflated pricing.

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From the $600 EpiPen to H.P. Acthar Gel — a treatment for infant seizures that costs $180,000 for two vials — manufacturers are accused of taking advantage of the public's ignorance about pricing as well as government incentives meant to spur innovation to reap big profits at the expense of the American people.

2. The middlemen impact what you pay.

Pharmacy benefit managers are middlemen in the drug supply chain that most people don't know about.

They are companies that negotiate for rebates on behalf of insurance providers, decide which drugs are going to be covered by your health plan, and even impact which pharmacy you can buy from.
Critics of these large corporations say their tactics lack transparency and are responsible for driving up the price of drugs, while the pharmacy benefit manager industry maintains their role leads to savings for the health plans they work with.

3. You pay for high priced drugs whether you take them or not.

When health plan sponsors, such as your employer or an insurance company, are hit with high drug prices for some of their members, they pass that cost along to everyone on the plan through increased premiums, higher deductibles and higher co-pays or co-insurance requirements.
Only 1 to 2 percent of patients take high-priced specialty drugs, yet they account for about 30 percent of expenses for both public and private health plans. The Ohio Public Employees Retirement System, which provides health benefits to nearly 200,000 Ohio retirees and beneficiaries, expects specialty drugs to make up 50 percent of the pension’s drug spending by next year. 
Everyone pays for the drugs covered by government health plans like Medicare Part D, which spent more than $18 billion in 2015 on just the top five most expensive drugs.
To give consumers better information on which to make their health care decisions, the Dayton Daily News digs further into two big drivers in how prescription prices are set, specialty drugs and pharmacy benefit managers, in Sunday and Monday’s papers. Look for more from this investigation online this week.

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