The average annual retail cost of specialty drugs used to treat complex diseases such as cancer, rheumatoid arthritis and multiple sclerosis now exceeds the median U.S. household income, according to a recent published report.

The study of 115 specialty drugs found that a year’s worth of prescriptions for a single drug retailed at $53,384 per year, on average, in 2013 — more than the median U.S. household income, double the median income of Medicare beneficiaries, and more than three times as much as the average Social Security benefit in the same year. The report was prepared by the AARP Public Policy Institute to highlight the impact of drug prices on seniors.

“We’re talking about drugs that are now costing more than a lot of people are making in a year,” said Leigh Purvis, director of health services research at the AARP Public Policy Institute.

She acknowledged that people with insurance do not pay the full retail cost of drugs, but noted that as drug prices increase, even the small portions of drug costs borne by consumers can add up. A study this year by the pharmacy benefit company Express Scripts, for example, found that in 2014, patients whose pharmacy bills were more than $100,000 that year paid less than 2 percent of their costs — on average, $2,782 out of pocket. Insurance plans and employers shouldered the rest, although those costs are ultimately passed on to patients in the form of higher premiums.

A study published in the New England Journal of Medicine last month estimated that if 5 percent of middle-aged adults with high cholesterol were eligible for a new generation of pricey high cholesterol drugs, premiums would increase by $124 per person.

Holly Campbell, a spokeswoman for PhRMA, the trade group that represents the pharmaceutical industry, called the report misleading and inaccurate because it fails to take into account the discounts and rebates that are applied to drugs through the negotiations between drug manufacturers, insurers and pharmacy benefit companies. She also critiqued the study’s methodology and pointed out that specialty medicines are used by a small number of people and account for a small share of total healthcare spending.

“The narrow subset of medicines covered in the report include many that offer improved treatment options for patients with conditions that previously had few or no options such as cancer and multiple sclerosis,” Campbell said in a statement.

The report comes as soaring drug prices have become a topic of national interest, with the Senate’s Special Committee on Aging opening an investigation into drug prices this month and presidential candidates on both sides of the aisle decrying the price-gouging and profiteering that they say is happening in some parts of the pharmaceutical industry. On Friday, the Department of Heath and Human Services is hosting a pharmaceutical forum focused on issues related to drugs, including costs.

“New medical breakthroughs can change lives, but we must make sure that they are available to those who need them. For the sake of patients, our health care system, and our economy, we must simultaneously support innovation, access, and affordability,” HHS Secretary Sylvia Burwell’s said in prepared remarks for the event.

At the root of the debate over high prices is a fundamental question: how much is a drug really worth? While several overnight price increases of existing drug prices have attracted the ire of politicians and the public, the pharmaceutical industry trade group has argued that those practices are atypical. Normally, drug prices reflect the millions of dollars spent in research and developing new treatments.

However, the report highlights drug price increases for a wide variety of drugs. Provigil, a drug given to treat excessive sleepiness, for example, increased almost six-fold between 2006 and 2013. Copaxone, a drug used to treat multiple sclerosis, tripled in price, from $19,023 for a year’s supply of 20 mg/ml SQ Kit in 2005 to $56,731 in 2013.

Written by Carolyn Y. Johnson for The Washington Post, November 20, 2015.

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