Are prescription drug prices increasing in 2021?
Prescription drug prices are expected to increase 3.59% through June 2021, according to a Vizient analysis of their membership, which accounts for about $70 billion in drug purchases. This includes a projected 3.36% increase in specialty drug prices, and a 3.45% increase in pediatric drug prices.
Specialty drugs are medications for complex chronic conditions. Pediatric drugs are medications for children and teens.
Although the price of prescription medication is expected to increase in 2021, projections suggest that the increase will be less than what it was in 2020.
Drug price increases in 2020
2020 began with drug manufacturers raising list prices on about 450 drugs sold in the United States. The increases ranged from 1.5% to 15%. According to the American Association of Retired Persons (AARP), these increases averaged 5.2%, or about double the projected rate of inflation.
Prescription drug price trends
In their United States National Health Expenditures report, the Centers for Medicare and Medicaid Services (CMS) projected that by 2024, net spending on outpatient prescription drugs should shrink to less than 9% of total U.S. spending. This would be the lowest level since 2000.
The projection also shows that by 2021, the growth rate for drug spending will catch up to the growth rate for overall healthcare spending. This change is based on:
- Projected higher growth in use
- Faster price increases
- Reduction in rebate offers
Medicare drug costs in 2021
Medicare Part D can be purchased from private insurance companies to add prescription drug coverage to original Medicare (Part A, which is hospital insurance, and Part B, which is medical insurance). These plans from Medicare-approved companies charge a monthly premium that varies by plan.
According to CMS, the average basic Part D premium will be approximately $30.50 in 2021. CMS also reports that the 2020 Part D base beneficiary premium is $32.74. Based on your income, you may pay more with a Part D Income Related Monthly Adjustment Amount (Part D IRMAA).
CMS indicates that in 2021, seniors who have been prescribed insulin will have a broad set of insulins available at a per-prescription cost of no more than $35 per month.
Prescription drugs may also be covered by a Medicare Part C plan (Medicare Advantage plan) available from private insurance companies. Medicare Part C plans combine original Medicare and often include Medicare Part D and other coverage such as vision, dental, and hearing.
Although the costs for prescription medications continue to rise, the rate of increase appears to be slowing. Projections for the first half of 2021 (3.59% average increase) suggest that the increase in costs for prescription drugs will be lower than the increase in 2020 (5.2% increase).
These numbers reflect prices on hundreds of medications. Talk to your doctor about the medications you take. Some increases in cost may be higher than the projections, and some may be lower.