Out-of-Pocket Costs: An Out-of-this-World Problem

Let’s face it: out-of-pocket costs for patients with chronic diseases like arthritis are consuming an ever-growing share of household spending. Lowering drug prices has been a central priority of Congress and the Administration this year, and while a lot of attention is paid to drug companies and insurers, the impact on the patient often gets lost. There may be a lot of chatter about list prices, rebates, and other technical terms, but at the end of the day the health care price that matters most to patients is the one coming out of their own pocket.

Managing your health costs starts with knowing what your true out-of-pocket costs are. Although some insurance companies have tools to help you figure out what you might pay for a knee replacement surgery or an MRI, recent surveys show that patients and consumers don’t have easy, clear, or consistent access to this information. Time and again, Arthritis Foundation surveys consistently show out-of-pocket costs as one of the top three health care challenges. If you aren’t able to afford needed medication, it can lead to a whole host of other concerns such as switching to another, less effective drug; failing to take drugs as prescribed by your provider; or abandoning drugs at the pharmacy counter altogether. What can we do to address the cost of prescription drugs?

The Arthritis Foundation has been hard at work to understand patient experiences and priorities around drug costs. In June, we conducted a survey among our Advocates about out-of-pocket costs; for patients on Medicare, we asked about experiences transitioning onto the program. Here are highlights of what we found:

  • About 75 percent of respondents were required to go through prior authorization for their drug when transitioning from one insurance plan to another. In addition, 2 in every 5 respondents were required to go through step therapy (sometimes known as “fail first”) for their medications.
  • Two-thirds of respondents believed that $50 was a fair maximum out-of-pocket cost per drug per month for a health plan; one-quarter felt $50-$100 was a fair maximum per drug per month.
  • For respondents on Medicare, 80 percent ranked out-of-pocket share of health costs as the aspect of care they knew the most about.
  • Medicare respondents also overwhelmingly supported a cap on out-of-pocket medication costs under Medicare Part D, the prescription drug program.

These important insights formed the basis for our new issue brief on the cost of prescription drugs. You can click here to read the issue brief, but here’s the bottom line: Policymakers need to ensure drug pricing policies benefit the people they are intended to serve – and that’s patients. There are three important principles that policymakers should know about people with arthritis and out-of-pocket costs:

  1. Patients should be empowered with tools and information to choose the right health plan. As we described above, health care cost tools available for patients today are difficult to access and are not standardized. Patients should be able to easily determine whether their drugs are on formulary and understand the entire cost of care.
  2. Value-based care holds promise to move the health care system toward improved patient outcomes and greater efficiency. As more transformative medicines come to market, it is important to ensure sustainable access to high-value treatments and services for all patients. Policymakers should remove barriers to value-based care models and shared decision-making tools.
  3. The drug supply chain operates opaquely and in a way that can lead to misaligned incentives, with decisions favoring every stakeholder except the patient. Transparency should be meaningful, and not for the sake of transparency alone. In addition, policies should encourage competition to help drive down costs.

We’re spreading the word with policymakers about the need to address prescription drug costs, and you can help! Visit our Action Center to tell your legislator what matters most to you in the drug pricing debate. You can also share your story about the impact high out-of-pocket costs have had on you and your family.

 

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