When drug manufacturer Mylan increased the list price of EpiPen last summer, it suffered the wrath of celebrity backlash. Actress Sarah Jessica Parker publicly criticized the company for raising the price of its emergency allergy treatment to $608.1
EpiPen, which has been around for decades, cost less than $100 when Mylan originally acquired the product in 2007. The company declined to comment on the price hike, but cited high-deductible health plans as a reason consumers now pay so much out-of-pocket for drugs.2
If you think health care expenses are high now, imagine what they could be if they continue on this trajectory. One recent study asserted that, because health care inflation is dramatically higher than regular inflation, someone who retires this year may encounter $33,000 or more in total health care expenses during retirement than someone who retired in 2015.3
When planning for retirement, it’s important to factor in the potential increase of medical costs and other expenses, in addition to possible reduced expenses, such as mortgage payments and work commuting. We can help you create a retirement income strategy through the use of insurance products that you can feel confident about.
While increasing pharmaceutical prices aren’t a new controversy, Parker’s celebrity status may have helped bring the issue into mainstream discussion. She posted on Instagram that she would no longer purchase the company’s products, urging them to “lower the cost to be more affordable for whom it is a life-saving necessity.”4
The new-found spotlight on drug prices has generated some pretty interesting revelations about the industry. For example, because the process for developing new drugs and getting them approved by the FDA is so costly and time-consuming, some drug makers routinely look at their product line to see which ones are in a market that will tolerate a substantial price increase.5
Unfortunately, one of those markets is “orphan drugs.” “Orphan drug” is the category name of medications developed for rare diseases, specifically those that affect fewer than 200,000 people. Because of the smaller market, these drugs tend to be quite expensive. In fact, legislation passed in 1983 was designed to encourage drug makers to develop treatments for such rare diseases. However, the market has become so lucrative that it threatens to increase insurance premiums for the broader population.6
Regardless of what happens in the drug industry, what is important is how each of us can prepare for health care expenses and take advantage of cost-reduction strategies where available. To this end, the following are some basic tips to consider when a prescription drug is necessary:7
- Ask for a generic drug when prescribed a name brand drug
- Ask your physician if there is a single medication that can address ailments for which you take multiple pills
- Before you get your prescription filled, check with your insurance to see where the drug lies in your plan’s drug formulary. If it’s in a higher tier, print out the formulary and show it to your physician to see if there’s a lower-tier option that would work as well. Your pharmacist, in consultation with your doctor, may be able to help with this as well.
- Use a mail-order plan for common maintenance medications
- Make sure the pharmacy you go to is within your plan’s network
- Check the drug manufacturer’s website for discount coupons
Content prepared by Kara Stefan Communications.
1 CBS News. Aug. 26, 2016. “Sarah Jessica Parker cuts ties with EpiPen over price hikes.” http://www.cbsnews.com/news/sarah-jessica-parker-cuts-ties-with-epipen-over-price-hikes/. Accessed Oct. 3, 2016.
2 Tara Parker-Poe and Rachel Rabkin Peachman. The New York Times. Aug. 22, 2016. “EpiPen Price Rise Sparks Concern for Allergy Sufferers.” http://well.blogs.nytimes.com/2016/08/22/epipen-price-rise-sparks-concern-for-allergy-sufferers/?_r=0. Accessed Oct. 8, 2016.
3 HealthView Services. Sept. 21, 2016. “HealthView Services: 2016 Retirement Health Care Costs Data Report.” http://www.hvsfinancial.com/PublicFiles/2016_RHCC_Data_Report.pdf. Accessed Oct. 3, 2016.
4 CBS News. Aug. 26, 2016. “Sarah Jessica Parker cuts ties with EpiPen over price hikes.” http://www.cbsnews.com/news/sarah-jessica-parker-cuts-ties-with-epipen-over-price-hikes/. Accessed Oct. 3, 2016.
5 Knowledge@Wharton. Aug. 26, 2016. “Will Mylan’s EpiPen Episode Help Curb Pharmaceutical Price Gouging?” http://knowledge.wharton.upenn.edu/article/why-competition-failed-to-regulate-the-cost-of-epipen/. Accessed Oct. 10, 2016.
6 Carolyn Y. Johnson. The Washington Post. Aug. 4, 2016. “High prices make once-neglected ‘orphan’ drugs a booming business.” https://www.washingtonpost.com/business/economy/high-prices-make-once-neglected-orphan-drugs-a-booming-business/2016/08/04/539d0968-1e10-11e6-9c81-4be1c14fb8c8_story.html. Accessed Oct. 13, 2016.
7 Kara Brandeisky. Time. Feb. 29, 2016. “13 Smart Ways to Save on Prescription Drugs.” http://time.com/money/4229587/save-money-prescription-drug-costs/. Accessed Oct. 13, 2016.
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