Why Are So Many Drug Prices Increasing?

pills stacked on coins
Roni Shye
Roni Shye, PharmD BCGP BCACP, is a licensed pharmacist in the states of Florida, Ohio, and Pennsylvania.
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If you’ve been following the news, huge price increases on necessary drugs like Daraprim and cycloserine may seem unusual—they both dropped in price again once people noticed and complained, right?

The unfortunate reality as that price increases happen in the pharmaceutical industry day-in and day-out. While the majority aren’t quite as dramatic as the Daraprim price hike, they happen more often than you might think. In fact, you may be taking a medication that’s seen a price increase without even realizing it.

How can a price increase affect what you pay?

If you have insurance, you may continue to pay the same co-pay depending on how much more your drug costs at the pharmacy. If you pay a portion of the cost (coinsurance) instead of a flat co-pay, have a high deductible plan, or if you pay cash for your prescriptions, you’re more likely to be affected by changes in price.

Where might you see an increase without an explanation?

Many big retail pharmacy chains like Walmart, Target, and Winn-Dixie have a list of discounted generic medications—often costing only $4 for a 30-day supply or $10 for a 90-day supply. This selection of low-price generics can be incredibly helpful for keeping your costs down, and may be lower than many insurance co-pays. However, the lists of covered generics are subject to change with little to no notice, and most of the time it’s due to the increased cost of a medication.

Why do drug prices go up?

Higher cost to the manufacturer is one of the most common causes of a price increase, and you will see the difference passed on to you at the pharmacy. Shortages can affect price as well. If a medication that many people need isn’t widely available, the price may spike (sometimes temporarily, sometimes not). Shortages can be due to manufacturing issues, higher demand than expected, or a shortage of the active ingredient, among other causes.

Which other drugs have seen recent price hikes?

What about pricey new treatments?

New drugs can also be very expensive, and there has been controversy around the high price of new treatments that can save lives like Hepatitis C medications Sovaldi, Harvoni, Olysio, Viekira Pak, and Daklinza. Sovaldi, for example, can still run up to $84,000 for a full course of treatment.

Another example: new injectable cholesterol medications Repatha and Praluent can help people for whom regular treatments like statins may not be enough. They both also carry a hefty cost at over $14,000 per year.

Manufacturers often justify the price of these drugs by stating that they are less expensive than current alternatives, they will lower the cost of hospital care by preventing other health issues, or that the cost is justified by the amount of research and development necessary for a new medication.

Drugs featured in this story

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