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In a climate of sharply higher health care costs under the Affordable Care Act, one number stands out: 33 percent. That’s how much prescription drug costs under ACA coverage rose in one year, according to a review of our claims data.

Prescription claims averaged $96.70 per month for each ACA customer in the first six months of 2015. Over the same six-month period last year, we were paying to the tune of $73 a month.

That 32.5 percent increase comes as pharmaceutical companies are under intense scrutiny for how they price new prescription drugs. To note one example cited in the Mayo Clinic Proceedings, cancer drugs have risen in average price from about $10,000 a year in 2000 to more than $100,000 in 2012.

 

Costly New Drugs Available

Claims data from our ACA line of business shows that prescription costs went up more than any other category of medical care in the first half of this year. We recently shared our data about emergency department visits, where costs are up 27 percent. The rise in drug costs also outpaced hospital inpatient and outpatient care as well as doctor visits.

So what’s driving prescription costs? As much as anything, it’s the sharply rising costs of new and improved medications, specialty pharmaceuticals that can be costly to develop and administer, and maintenance drugs for chronic conditions.

Take a new class of diabetes drugs as an example. Known as SGLT2 inhibitors, the drugs, including Invokana and Farxiga, carry a retail price of around $350 to $400 per month. By contrast, the older class of diabetes drugs (metformin) can be found for as little as $4 a month in generic form.

Of course, new drugs might perform better for some patients and have fewer side effects. But those advantages come with a cost.

Specialty drugs are more complex to make and distribute, and sometimes require special handling and administering by medical professionals. They’re used to treat chronic or serious conditions such as cancer, multiple sclerosis, hepatitis C and HIV. Specialty drug costs overall rose nearly 31 percent in 2014, according to the Express Scripts 2014 Drug Trend Report, and will continue rising at least 20 percent a year through 2017.

 

Impact on Rate Filing

The rise in drug spending for ACA coverage also reflects the realities of North Carolina’s ACA market. As a whole, ACA customers experience more chronic conditions and are using their health benefits at a higher rate than expected.

In August we filed new rates for individuals with ACA plans for 2016, seeking a 34.6 percent average increase in ACA plans for individuals under age 65.

The North Carolina Department of Insurance will decide on our rate filing. Several other states have announced their results for 2016, including increases of 36.3 percent and 44.7 percent respectively for Tennessee’s two largest health plans on the ACA exchange. In Oregon, the insurance commissioner ordered several insurers’ rates higher than what they had requested, citing concerns about whether insurers could remain solvent.

About Kyle Marshall

Kyle Marshall, a senior communications specialist at Blue Cross and Blue Shield of North Carolina, writes about the health care industry and provides communications counsel and support to the company's executive team.