Who Should Pay for “Specialty Drugs”?

Patients with health insurance can end up paying $30,000 a year or more:

The controversy centers on so-called specialty drugs, a somewhat imprecise term that generally encompasses products that can cost tens or even hundreds of thousands of dollars a year.

Such drugs account for only 1 percent of total drug use, but 17 percent of drug spending by private insurers, according to IMS Health…

But some insurers are now putting specialty drugs into a fourth tier of their own with extra high co-payments, or even co-insurance, in which the patient pays a percentage of the drug cost.

About 14 percent of workers with insurance are in plans that have four or more tiers, up from 7 percent in 2008, according to the Kaiser Family Foundation’s 2011 survey of benefits.

See our previous post on the problem.

Comments (6)

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  1. Vicki says:

    Health insurance should pay for specialty drugs, where the costs are catastrophic.

  2. Nancy says:

    I agree with Vicki.

  3. Joe Barnett says:

    Why would 100K drugs even exist, unless someone is subsidizing the cost of development (as with so-called Orphan Drugs) or they are especially effective? It makes little sense for an individual or an insurance company to pay a $100K for a drug that isn’t particularly effective, just because it’s the only drug available for a condition. On the other hand, heart transplants are now so effective (due to better antirejection drugs) that they can prolong life an average of 10 years. That’s worth it.

  4. CBrady says:

    I’m with Joe on this one — what kind of super drug is it that it costs $100k?

  5. Brian says:

    If enough insurers raise the co-pays on specialty drugs, it’s conceivable that the prices will go down……or will they?

  6. John R. Graham says:

    Brian, I think the point of the post is that the benefit design is not meant to drive the prices of the medicines down but to avoid attracting people with expensive illnesses.

    It is a necessary consequence of the rules that the government has enforced in the group market and, post-Obamacare, in the individual market.

    Of course, the result is not health “insurance”, but the opposite of insurance. Because current health benefits are not insurance, but pre-paid health care, most individuals do not consider the problem brought about by this design.

    A market of actuarially accurate, individual insurance would result in the costs of these specialty drugs being fully covered, but the costs of 80 percent of the population who have minor health costs not being insured at all – but paid out of pocket.

    Premiums would be lower and benefits far more valuable to the sick!