Jan 11, 2019
Prescription drug costs are a major contributor to driving up health plan premiums according to a recent report by the California Department of Managed Health Care (DMHC). Health plans paid nearly $8.7 billion for prescription drugs in 2017, which accounted for 13.1% of the total health plan premium. (The report only includes prescription drugs dispensed through retail or mail order pharmacies, and not drugs provided in a hospital, administered in a doctor’s office, or otherwise paid for through capitated payments to delegated providers.) Specialty drugs accounted for just over 1% of the total number of drugs prescribed, but represented over half of the health plans’ total annual prescription drug spending. Generic drugs made up nearly 90% of all the drugs prescribed in 2017, but represented only about one-quarter of total annual prescription drug spending. The report also finds the following:
- Health plans’ prescription drug costs increased 5% in 2017 while medical expenses increased 5.9%.
- Manufacturer drug rebates equaled approximately $915 million or about 10.5% of the $8.7 billion spent on prescription drugs.
This is DMHC’s first annual report on prescription drug costs since the enactment of SB 17 in 2017. Under the California law, health insurers that file rate information annually with the DMHC or the California Department of Insurance must also report specific information on the costs of covered prescription drugs.
For more information, contact your LISI Regional Sales Manager.
