Has the ACA Lowered Drug Prices?

When the Affordable Care Act passed in 2010, legislators hoped the law would reduce the cost of medical care. After five years, have consumers seen a reduction in healthcare costs? According to PBS News Hour, no.

American consumers pay more for drugs than anyone else in the world. And while the ACA has made insurance available to more people, the high deductibles on many exchange plans mean that people are still paying out-of-pocket for their medications. Americans don’t have access to the kind of government-regulated drug prices that other nations take for granted.

American Exceptionalism Applies to Drugs, Too

According to Megan McArdle, an economics blogger for Bloomberg, it would be impossible for Americans to pay Canadian or European rates for name brand drugs. The high prices Americans pay actually fund the development of new drugs. If the US government tried to negotiate the same prices other countries pay, pharmaceutical firms would go bankrupt and new drug development would grind to a halt.

So, what’s a cash-strapped American to do? Most Americans, and their physicians, choose generic drugs whenever they can. 84% of US drug prescriptions are generic. No other country uses generics so frequently. Americans are used to asking about less expensive medications. In general, they only use name-brand medications if the generic is unavailable or if it has undesirable side effects.

Spending at the Margins

Unfortunately, new drugs are very expensive. For instance, Pharmaceutical companies have started developing a new generation of cancer drugs. These drugs are very effective for small numbers of people, and extraordinarily expensive. In the past, a doctor might try a ‘throw it at the wall and see what sticks’ approach to cancer medications. Now, when many drugs cost 10K to 30K a month, patients, insurers, and doctors must seek evidence-based solutions. A recent New York Times article explained how some oncologists are trying to help patients balance drug costs with drug benefits. The doctors score medications based on their effectiveness, side effects, and cost. The scores can help patients choose between drugs, weighing expected benefits against known costs.

No Job for a Novice

Weighing the evidence for or against a drug is no job for a novice. In a diverse country such as the US, certain drugs may benefit one group of people while harming another group. Effectiveness studies are densely written, and must be checked for statistical or methodological flaws. Without an evidence-based approach to drug plans, your company could lose money or damage employee health and morale. US drug prices won’t be trending down anytime soon, even with the ACA.

RxResults can help you navigate the data and craft the perfect drug plan for your company and your employees. To learn more, visit www.rxresults.com.