Episode Details

The Truth about Prescription Costs. Prescription drug benefit costs has increased 1150% since 1987 This is the ABQ Business Podcast with your host Jason Rigby. Each week we interview leading business leaders to inspire the vision and the spirit that is in every entrepreneur. We discuss strengths, weakness, strategies, systems and the problems we can all solve together to fulfill a shared vision of a new future for Small Business. About Well Life ABQ: Well Life ABQ is your simple way to Solve your Healthcare Costs! This is from their website that you can go to here Are the costs of employee healthcare making you sick? We can help you fight back! Schedule a free business review. When we understand your healthcare needs, we can develop the best plan customized to your needs. For $75 per month plus tax, companies cover 80-90% of their employee's health needs.

PROBLEM

1. Prescription drug benefit costs has increased 1150% since 1987
2. 1. Since employers are the main providers of health insurance benefits, they are bearing the brunt of these costs. Is there any other line item in a company budget, that has increased this much?
   2. Patient costs have also increased 182% since 1987
   3. Both employees and employers bear the burden of these huge cost increases. (CEOs guide)
   4. All companies that provide insurance benefits, run a health care business. It is likely the 2nd biggest operating cost after payroll.
   5. And if you don't provide benefits, you have a tougher time recruiting top talent.

As with all complex problems, there is not a single cause.

COST DRIVERS

There are two main drivers of increasing prescription drug prices.

1. Pharmaceutical companies (most people know this)
   1. According to RealClearHealth.com "PBMS fail to pass $120billion back to consumers and retain another $30billion in additional out of pocket costs.
2. Pharmacy Benefit Managers <--- this is the real dragon

PHARMACEUTICAL COMPANIES

1. Brand name drug prices are possibly justified
2. 1. Research and development has a wide range, but is around $985million
   2. Average cost of FDA approval for a new drug is $19million alone.

PBMS

1. History
2. 1. Originally processed prescription claims for a small administrative fee.
   2. Great system at first…then these middlemen began to exert more and more control. They developed formularies and controlled which drugs were "allowed" to be prescribed
   3. Began to concentrate their power. Larger PBMs gobbled up smaller ones. Some even merged with actual insurance companies or drugstore chains ie CVS Caremark. CVS Health just acquired Aetna. And Express Scripts was acquired by Cigna. OptumRx is affiliated with United Health