Specialty Drug Prices Help Increase Insurance Costs

September 20, 2017

New data show that health benefit costs in 2018 will rise by their highest since 2011.

Health benefit costs are expected to rise sharply in 2018, partially due to the rising costs of specialty drugs.

This is according to a new survey from Mercer, a human resources consulting firm, which estimates that the average per-employee health benefit costs will increase by 4.3% in 2018. This is the highest rate of increase since 2011, when costs rose 6.1%. These numbers are based on early responses to Mercer’s “National Survey of Employer-Sponsored Health Plans, 2017,” which will be released in full later this year. The early results were from a poll of nearly 1,500 employers, while the full report will feature around 2,400 employers.

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Specialty drug costs play heavily into the estimate, as costs are expected to rise more than 7% in 2018 as “spending on new specialty medications skyrockets.” The survey respondents said that spending on specialty drugs rose by over 15% since their last renewal.

“With so many new specialty drugs in the pipeline and few well-known brand-name drugs going off-patent in the near future, the spiraling drug cost problem will certainly get worse before it gets better,” said Tracy Watts, Senior Partner and Mercer’s Leader for Health Reform, in a statement.

The estimates are based on the failure to repeal and replace the Affordable Care Act (ACA), which could change if the current Graham-Cassidy-Heller-Johnson bill passes. Under current ACA rules, employers would face excise taxes on high cost plans in 2020, so employers have been taking steps to offer low-cost, high-deductible plans.