Specialty Drug Prices Help Increase Insurance Costs

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.