The high cost of new specialty drugs rightly has our attention. But that’s not the only reason why employers are reporting significantly higher increases in the per-employee cost of prescription drugs. A recent article in Bloomberg provides some chilling examples of massive and seemingly unjustifiable price hikes for brand-name drugs. According to BloombergView columnist Megan McArdle, “Drugmakers set prices based on whatever the market will bear, especially since demand for some therapeutic drugs is relatively inelastic — in other words, demand does not change much in response to price changes.” And it’s not just the brand-name drugs we have to worry about. An article published last year in Forbes describes why we’re seeing unsettling increases in generic drug pricing as well; namely, consolidations in the pharma industry and supply shortages. Long story short, this is the year to focus attention on the drug benefit.
Go to full article: bloomberg.com