Prescription Drug Prices Increase: Introduction
Have you ever been caught off guard when your prescription drug prices increase? Have you wondered what’s causing the drug price trends to seem to point upward?
Maybe you were standing at the counter when your pharmacist rang up your total, and to your shock and amazement, the number on your bill was much higher than you had previously paid.
After shaking your head and feeling forced to pay the extra money you don’t have, you walk away wondering, “Why do medication costs rise?”
This isn’t unique to you, and it’s not a one-time event. Patients across America don’t find out the cost of their needed medication has risen dramatically…until they are there at the pharmacist’s counter.
In fact, according to GoodRx’s own survey, as many as 46 million Americans leave their prescription at the counter and don’t pay due to the cost.
Sadly, prescription drug price increases often happen without warning and can cause massive stress and anxiety for patients who are already financially strained.
This article will not only explain why medication costs rise suddenly, but also provide practical, actionable solutions, such as Prescription Hope’s medication access service.
Why Do Prescription Drug Prices Increase Without Notice?
Rising medication costs can be attributed to many different factors. However, a few stand out as the primary reasons for your prescription drug costs rising without notice.
Some of those factors include:
- Manufacturer Pricing decisions
- Supply chain disruptions
- Insurance and Pharmacy Benefit Manager (PBM) changes
- Market exclusivity and reduced competition
- Increased demand
- Pharmacy-level and region pricing factors
Each of these reasons, along with others, combine to create the drug price trends we see today, for both brand-name and generic medications.
1) Manufacturer Pricing Decisions
Outside of pricing regulations, drug manufacturers largely control the pricing of their medications. Typically, these manufacturers will determine the cost of the drug based on factors like:
- Research and development
- Comparable drug prices
- Specialized nature of the medication
- Supply and demand
These reasons include market strategy, competition, drug price trends, and even projected costs based on demand, markets, and government regulations.
Prices can be adjusted at any time, like a typical product, and are often done so without advance notice to patients or pharmacies.
However, some drug prices are hiked due to routine price increases that occur either once or even multiple times per year, even when manufacturing and research costs have not changed. Sometimes, these price hikes are more a result of a company’s financial goals than a factor forcing them to raise prices.
Unlike most other countries, the U.S. does not regulate how often or even the amount of drug price increases. This allows manufacturers to raise prices,potentially resulting in sudden and dramatic increases for patients.
2) Supply Chain Disruptions
When a supply chain disruption occurs, the availability of various parts of the medication, such as raw materials or active pharmaceutical ingredients (APIs), is affected.
Unfortunately, a lack of access to ingredients or materials can mean manufacturing delays or facility shutdowns.
Similarly, situations like global events can disrupt the transportation and logistics of those materials or the supply of finished prescription drugs, forcing higher drug costs to help offset rising drug prices.
Shortages in transportation, materials, or production access mean the supply of that medication may not be adequate, forcing a rise in demand for the finished product available to the market.
Typically, this results in drug prices rising to meet demand.
3) Insurance and Pharmacy Benefit Manager (PBM) Changes
When insurance agencies change their formularies and reclassify tiers, this can result in dramatic changes to the prices patients see. While the medication costs may be offset by the insurance company, any changes by the insurance company or Pharmacy Benefit Manager (PBM) can affect the final cost the patient sees.
Not only that, but higher copays, deductible resets, and renegotiated rebates may also change the price at the pharmacy counter. Which means the patient sees the difference in what they pay out of pocket for their medications.
4) Market Exclusivity and Reduced Competition
Many pharmaceutical manufacturers work to maintain patent protections on their brand-name drugs. This means no generics of the same drug can be manufactured due to the patent protections.
When a drug has little to no competition from the generic market, the price can remain at a more profitable level for the pharmaceutical manufacturer.
5) Pharmacy-Level and Regional Pricing Factors
While a large portion of a drug’s price is determined by global or industry factors, a patient may see differences in pricing depending on the pharmacy they frequent or the region they live in.
Chains, independent pharmacies, and even mail-order pharmacies all must earn enough money to stay in business. With different business models and operating costs, some pharmacies may charge more or less for a particular drug to cover their expenses.
When paying for medication at a pharmacy, be aware that many times, you may receive a different price depending on whether you’re paying cash, using insurance, or accessing an assistance program or service.
Likewise, the area you live in may determine some of your prescription drug pricing. Various factors can cause your out-of-pocket prescription drug costs to rise. Those factors include:
- Standard of living
- Regulations
- Business costs
Current drug price trends show that prescription medication costs are rising steadily. Often, these prices are increasing without a clear explanation or even a warning to patients.
Specialty drugs, medications for chronic conditions, and brand-name medications may see outsized increases when compared to generic or older brand-name medications.
Higher pricing typically results from limited competition and helps regulate demand for the product. Not only that, but higher drug prices also produce profits for manufacturers looking to recoup their research and development costs.
While inflation has contributed to higher healthcare costs, drug prices often outpace inflation rates. For those who rely on long-term prescriptions, this can create financial strain and uncertainty.
Unfortunately, the pricing system involves many different levels of businesses and organizations, making it hard to determine the causes of drug price increases or the likelihood of more increases.
From the manufacturer to the pharmacy, and to insurance companies and PBMs, each level influences the final out-of-pocket cost for a patient.
How Patients Can Respond to Rising Prescription Costs
If your prescription drug prices increase, and it’s hitting you hard, and you’re being affected by drug price trends, then be sure to follow these possible solutions.
Above all else, be sure to keep watch on your medication prices. Review your insurance coverage regularly, compare plans during open enrollment, and discuss your medication costs with your pharmacist and doctor.
1) Ask About Generic or Therapeutic Alternatives
When talking to your doctor, ask whether a generic alternative exists.
After the patent for a brand-name drug expires, any other pharmaceutical manufacturer can begin producing the same compound, also known as a generic.
These therapeutic equivalents may cost much less than the original brand-name version and offer an opportunity for patients to get access to a more affordable treatment.
Research possible alternatives to the brand-name medication that you take and then ask your doctor for their recommendation.
2) Talk to Your Pharmacist When Your Prescription Drug Prices Increase
Your pharmacist will know the final price of your medication, and they will also know possible alternative treatments.
And if there are no alternatives, be sure to advocate for yourself by requesting price checks at different pharmacies, asking about cash-pay discounts, and discussing dosage adjustments.
Please note that do not make any changes to your dosing strength or schedule without your doctor’s approval.
3) Explore Patient Assistance Programs
When prescription drug prices increase, a patient can be left wondering whether any help is available. Thankfully, plenty of assistance programs exist for those who are struggling to afford their medications.
Solutions are available and ready to help. Patient Assistance Programs offered by manufacturers provide access to brand-name medications at a fraction of the cost. Patients who qualify may save hundreds, if not thousands, of dollars every month.
Prescription Hope is a trusted resource that helps patients access their medications through Patient Assistance Programs for a simple, fixed rate of $70.00 per month, per medication.
Conclusion: Why do Prescription Drug Prices increase without Notice and How Patients can Respond
Sudden prescription drug price increases are common; however, patients are not powerless against rising medication costs.
Being proactive and asking questions can mean the difference between affording your medication and continuing your treatment…and leaving your prescription at the counter after realizing you can’t pay for it.
Be sure to:
- Ask questions
- Explore alternatives
- Seek assistance
And if you’re seeking help in finding a solution to your prescription drug prices increase, then please contact us. For 20 years, we have helped patients across America afford access to the medication.
In only a few minutes, you can fill out our enrollment form, and a Prescription Hope advocate will contact you within 1-2 business days.
Enroll with us today and start saving on your medication access.
