You’ve probably seen the news reports on rising health insurance premiums, or simply noticed a difference in your own monthly costs over recent years. But what you don’t know might surprise you: While we might imagine that higher doctor or hospital bills are to blame, the cost of specialty drugs is another driving force behind the increase.

The California Department of Insurance recently released their Prescription Drug Cost Transparency Report, and the results were illuminating. In 2017, brand name prescriptions totaled 1.4 million, prescriptions for generic drugs totaled about 8.9 million, and specialty drug prescriptions totaled 270,000.

While it seems that specialty drugs comprised only a minority of overall drug prescriptions for that year, reported spending shows a different side of the story. While brand name drugs costs insurers about $271 million, and generic drugs cost about $172 million, the total bill for specialty drugs topped out at a whopping $606 million!

How does this spending contribute to premium hikes? According to the report…

• Brand name drugs make up about 11 percent of insurer spending, and carry a 1.2 percent impact on premiums
• Generic drugs make up about 4 percent of insurer spending, and carry a 0.3 percent impact on premiums
• Specialty drugs make up about 20 percent of insurer spending, and carry a 3.7 percent impact on premiums

So, what are “specialty drugs”, anyway? These prescriptions generally apply to complex medical conditions, and require special administration and monitoring. Generally, they require special approval from insurance companies before coverage for their use can be obtained. The most commonly prescribed specialty drugs are:

• Humira (an immuno-suppressant)
• Truvada (a common HIV drug)
• Humalog (an insulin therapeutic)
• Victoza (a drug used for diabetes)
• Androgel (a hormonal prescription)
• Enbrel (used for arthritis)
• Stelara (a psoriasis and psoriatic arthritis treatment)
• Copaxone (used for Multiple Sclerosis)

Rising health insurance premiums affect us all. While we take comfort in the fact that all insured individuals are able to access the prescription drugs needed for their health conditions, future advocacy work might focus on reducing the cost of these drugs, and on preventing serious health conditions. We will continue to keep you updated on this situation. In the meantime, please contact us if you have questions about health insurance premiums, supplemental forms of insurance, or any other related issues.