News Release 

Original investigation: When drug companies raise list prices, out-of-pocket costs for patients

When drug manufacturers raise the list price for brand-name prescription drugs, do patients' out-of-pocket costs rise too?

Brigham and Women's Hospital

Research News

WHO Benjamin Rome, MD, Instructor of Medicine at Harvard Medical School and researcher in the Program On Regulation, Therapeutics, And Law (PORTAL) in the Division of Pharmacoepidemiology and Pharmacoeconomics, Brigham and Women's Hospital; corresponding author of a paper published in JAMA Network Open.

WHAT When drug manufacturers raise the list price for brand-name prescription drugs, do patients' out-of-pocket costs rise too? A new study published in JAMA Network Open by Dr. Benjamin Rome and colleagues in the Brigham's Division of Pharmacoepidemiology and Pharmacoeconomics finds that more than half of patients may experience increases in out-of-pocket spending when drug prices increase.

Rome and co-authors studied 79 brand-name drugs and found that the "list price" charged by drug manufacturers increased 16.7 percent, the "net price" (after manufacturer rebates) by 5.4 percent, and average out-of-pocket costs by 3.5 percent from 2015 to 2017. Some commercially insured patients who pay only prescription drug copayments were insulated from the increase in drug's list prices, but patients with coinsurance or deductibles experienced out-of-pocket spending increases of 15 percent over this time, corresponding with the changes in prices. Among these patients, researchers found no evidence that manufacturer rebates offset out-of-pocket expenses.

"The exorbitant and unregulated prices set by drug manufacturers affect how much patients pay," said Rome. "Pharmaceutical companies often argue that the high list prices for their medicines are not important, but we found that many patients are responsible for coinsurance or deductibles, which exposes them to the annual price hikes that are common practice by many pharmaceutical companies."

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