Understanding Prescription Drug Coverage

August 3, 2015

Buying prescription drugs without insurance can cost hundreds and hundreds of dollars, especially if they are newly approved and they do not have a lot of competition for the type of drug it is. With bills like mortgage and insurance, most people do not have the extra cash lying around to pay for medication…medication that may provide the solution to a problem that might not even be their fault. Yet, they have it and have to be treated for it.

What You Need to Know About Prescription Drug Coverage

According to an article in International Business Times, the most expensive U.S drug is Soliris. It costs $536,629 a year. It is for the condition Paroxysmal nocturnal hemoglobinuria which is a rare life-threatening disease of the blood. This drug does not even reduce the risk of death or blood-clots associated with the disease; it simply reduces the need for blood transfusions, as well as the patient’s quality of life.

One of the most expensive drugs in America does not even treat the disease. How does this make sense? The disease may develop on its own or in association with another disease. So, the rare 26% of the people that are unlucky enough to get it will be in debt for a very long time if they decide they want to live.

Why Do They Cost So Much?

To get prescription drugs, you will be charged a good sum of money if you do not have insurance. Most of the time this isn’t a one time fee, either. You have to pay for each refill you need. Well, why do these drugs cost so much money?

There are several factors that lead to drug companies deciding the cost of their drug. Research and lab expenses of making the drug are very costly and need to be repaid from selling the drug. Some companies may sell the drug before the FDA examines it if they can prove its value; other companies will give the drug to FDA for evaluation themselves.

Competition

Competition is another factor in prescription pricing. “The FDA protects pharmaceutical companies from competition by prohibiting rival products from coming onto the market for five to seven years after a drug is approved.” So, that means drug companies are allowed to over price there drug for the first several years because there will be no others like it. Generic drugs are not allowed to be approved, either, until the company reveals the formula for the drug.

Insurance Providers

The way the drug companies decide on what price to choose is based solely on the insurance companies and not the actual consumers. They go as high as the insurance companies and health care providers are willing to pay for that drug. It does not depend on how much the consumers are willing to pay for the drug. So, patients who do not have insurance, or are underinsured, are forced to pay extremely high prices.

Other Pricing Factors

The companies also take into account the importance of the drug when deciding a price. If there is competition, they calculate what the insurance companies are currently paying for the competition. If it is new, they decide how important to someone’s life the drug is. If a patient can be very dependent on the drug, the price will raise even higher.

It should be noted that the list price is not always necessarily the final price. The insurers and government are allowed to negotiate the price of the drug by claiming rights under laws or by the number of patients they cover.

How Financial Assistance Works

Medicaid

There are several options for medical financial assistance for low-income individuals. Medicaid is one program that provides insurance for people that have low-income.  According to the government, “administrators at Medicaid have a ‘best price’ rule that entitles them to the lowest negotiated price that a drug company has offered private insurers. The agency typically earns at least a 15 percent discount off the list price of any drug.”

Medicare

Medicare is another financial assistance program, but it works very differently. Because it is a national insurance program for 54 million patients, Medicare does not follow the same rules and procedures as Medicaid. They are not allowed to negotiate the price, and they end up paying even higher prices for drugs than other agencies in the U.S.

Modern Medicare coverage is virtually guaranteed by law. However, President Obama recently announced a 2016 budget to decrease the amount Medicare spends to cover drugs for the 54 million patients enrolled. While the plan has set to be approved, there is some concern that it could result in Medicare covering only the most expensive medicines and the most desperate enrollees.

Prescription Assistance

A third and final option for those seeking financial assistance for medications is a prescription assistance program. Programs such as these exist nationwide, and their sole purpose is to help those with no or inadequate insurance coverage obtain their necessary medications. For a small monthly fee, they work with both insurance providers and pharmaceutical companies to deliver medications below their market cost.

There is injustice everywhere in the world, and no greater injustice occurs than when a desperate and ill patient cannot afford their medication. Some people blame the insurance companies, while others blame the pharmaceutical companies. Regardless of who is at fault or why some drugs cost so much, the fact remains that millions of people have no access to the meds they need. Yet, there are options for getting them, and they are always available if you know where to look.

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