Health Insurance Matters: Prescription Costs

Health Insurance Matters / Harry P. Thal

SPECIAL NOTICE: Come meet Harry and Staff at the Kern River Valley Hospital Health Fair this Friday, September 14, from 9:00 a.m. to noon.

Last year the lobbyists in Washington, DC who represent the pharmaceutical and health products industry donated in political campaign contributions $279,927,483. Allow me to round this up to $280 million dollars. This is an increase over the last several years before the White House announced plans to lower prescription costs. No wonder why President Trump is having difficulty getting the support of Congress to enact legislation to curb the escalating cost of prescription medication and biologicals.

The last big spike in political contributions came in 2009, where politicians received $271,724,917 in contributions, which may have lead to the Medicare Modernization Act MMA 2010, which altered the way Medicare’s prescription “Gap” or “donut hole” is covered. What appeared to be a 10-year plan to close the donut hole apparently opened the flood gates to increased prices. While the regulation reduced the gap to a 25 percent coinsurance, the price of many, if not most, brand name prescription drugs has increased well over 400 percent. The gap was to close in 2020, but President Trump has closed the gap for the brand name drugs effective this coming January 2019.

Drug manufacturers have an incentive to do business in the United States, and most of the foreign owned companies have their headquarters here in the USA due to our very liberal laws and patient protections.

For pharmaceuticals, once a drug has been available on the market for 16 years, generally speaking, that medication’s formula is open for competition to reproduce the medication under its scientific name. Hence, Lipitor has a generic equivalent, atorvastatin calcium.

Tory Marsh, MPH, a researcher at writing in the company’s recent blog 12 Brand-Name Drugs That May Never Go Generic says, “Humira, Enbrel, Xarelto—these are some of the many expensive brand drugs that cost well over $400 per month, leaving many to count down the days until a cost-effective generic is approved. But how long will we have to wait? As much as 40 years in some cases.

She goes on, “When President Reagan signed the Drug Price Competition and Patent Term Restoration Act (also known as the Hatch-Waxman Amendments) in 1985, drug makers were given the leverage to place long-standing patents on their drugs—for essentially the first time ever. Originally, the Act was intended to spur new drug development, incentivizing manufacturers to create new medications and shoulder the expensive cost of research and development in exchange for up to 20 years of market exclusivity.

“Drug makers have since found loopholes in the patent system and turned 20 years of price protection into nearly 50 years in some cases. How? By covering their drugs with hundreds of patents that have allowed them to prevent cheaper alternatives from being manufactured—and hike prices.

“The top 12 grossing drugs of 2017 have an average of 71 issued patents and at least 31 more years of patent monopoly. Some—like Enbrel and Humira—can cost well over $5,000 for a one-month supply.”

She concludes, “So, what does this mean?

“As you may have guessed, this probably doesn’t bode well for drug prices, and you’re right. In the past six years, the prices of four of these 12 drugs have more than doubled. What’s more, according to I-MAK, (, a non-profit dedicated to reducing the cost of medications making them available to all) these 12 drugs cost health insurers, government payers and consumers a total of $96 billion in 2017 alone.

“Manufacturers typically raise drug prices yearly, by as much as 10%. If manufacturers hold on to their monopolies for even the next 10 years, prices for these lifesaving drugs should continue to increase.”

When it comes to Medicare and prescription drug plans, the insurance companies negotiate prices with the pharmaceutical company. The negotiated prices can radically change from one year to the next. While company “A” may offer one of your medications at a great price in 2018, they may not have negotiated the best deal for the coming 2019, but company “B” has. Both Medicare Advantage HMO plans and the self-standing Prescription Drug Plans (PDP), normally purchased by people with Medicare Only or with a Medicare Supplement, need an annual review. This topic will be covered more fully at “Medicare and a Movie.”

MARK YOUR CALENDARS for “Medicare and a Movie.” The informative educational (no selling) seminar will again be held at Reel Cinema, Wofford Heights on October 3. There will be new HMO plans introduced for Kern County as well as a Medicare Advantage PPO plan.
Refreshments will be served. Doors open at 12:15 with the “pre-show.” Seminar is at 1:00 p.m. followed by the week’s feature film.

Harry P. Thal, MA, is a licensed insurance broker in California (0621106) and 24 other states. His offices are in Kernville. He is a member of the Society of Certified Senior Advisors and Past-President of the Kern Association of Health Underwriters. He may be reached at 760-376-2100, e-mail or visit him on the web at