Prescription drugs are more expensive than ever. Here's how to beat the costs.
Today, we have a dozen new drugs that hit the market with manufacturer price tags at over $1 million for a one-time treatment. In Tennessee, where the average income per year is around $36,000, that's simply unaffordable.
On behalf of its members, BlueCross BlueShield of Tennessee paid out $3.5 billion for drugs last year. The average member fills 18 prescriptions a year, with even higher numbers among our Medicare populations. It's our most widely used benefit, especially when considering the handful of doctor's visits an average member makes each year.
On closer look, high-cost specialty drugs make up 55% of that spending but only 2% of utilization. These drugs are costly because of exclusive manufacturing rights as well as complex manufacturing processes. Many of them are 'biologics,' which are are made from living organisms.
Some specialty drugs have helped improve disease outcomes and quality of life in meaningful ways, but let's be clear:
While providing access to safe and effective drugs is core to our purpose at BlueCross, we also have to consider how they raise costs for everyone who pays for health coverage. That includes members visiting the pharmacy and Tennessee businesses who are paying for their employees' plans.
But manufacturing fees aren't the only reason prescription drugs are more expensive than ever.
First, drug prices have consistently outpaced general inflation.
Since 1985, overall drug prices have risen at rates three times faster than inflation. By 2024, drug prices were more than 127% higher compared to the cost of all other commodities.
So, it's no surprise that pharma leads the health industry with an average profit margin of around 15%, compared to 1-3% for not-for-profit insurers like us, and roughly 5% for carmakers.
Opinion: Poor Tennesseans need affordable meds. This bill ensures they can access them.
Second, drug companies spend billions of dollars every year on advertising and promotion, which drives up the use of pricey treatments.
This kind of advertising is only legal in the U.S. and New Zealand, and it leads to patients pressuring their doctors for brand-name drugs they see in ads, even if they may not actually need them—or when lower cost alternatives that are just as safe and effective are available.
Examining our health behaviors and culture towards disease management can help us understand how we, as individuals, can navigate high drug costs.
Opinion: Here's how we can make prescription drugs more affordable for consumers
For example, we're seeing increased rates of cancer, diabetes, obesity, and other acute and chronic illnesses. And we've almost doubled the average number of prescriptions per member since 2014.
But while medication use is often the primary treatment for these conditions—and understandably so—most drugs work best in conjunction with lifestyle changes like exercise and diet improvement. In some cases, lifestyle changes can even reduce our dependence on medications.
At BlueCross BlueShield, we encourage our members to become active consumers in their health care decisions, and we offer resources that can help.
While we don't set the list price for drugs, we provide formulary and drug cost information so our members can compare drug prices the way they might with other goods. Research shows people might skip doses or avoid filling prescriptions if they can't afford them, so it's important to know all the options.
We also provide information on and access to generic and biosimilar drugs that are lower-cost options, and just as effective.
Choosing a generic and biosimilar over a brand name is the most effective way consumers can lower their costs—often by 80-85%. These drugs are highly regulated to be the same as their more expensive counterparts, and manufacturers often produce both the brand-name and generic or biosimilar drugs.
Simply put, becoming informed consumers in our health care journey is crucial. By understanding medication coverage, comparing treatment options, and asking about the cost of medications, we can make informed choices that align with our individual financial and health needs.
Natalie Tate, PharmD, is vice president of pharmacy for BlueCross BlueShield of Tennessee.
This article originally appeared on Nashville Tennessean: How to avoid high prescription drug costs, and stay healthy | Opinion
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Denmark has moved to increase its retirement age to 70 — making it the highest retirement age in Europe. Yet it may be difficult for the U.S. to follow its lead. The new change in Denmark will apply to public pension retirements starting in 2040. Since 2006, the country has been adjusting its retirement age to reflect changes in life expectancy. The U.S. does not technically have an official retirement age. At age 65, individuals become eligible for Medicare coverage. At age 66 to 67, depending on date of birth, an individual becomes eligible for full Social Security benefits based on their earnings record. More from Personal Finance:House Republican tax bill favors the richSome lawmakers want to defer capital gains taxes for mutual fundsWhat the House GOP budget bill means for your money However, those individuals who wait until age 70 to claim Social Security retirement benefits stand to get the biggest payout — an increase of 8% for each year beyond full retirement age. (The full retirement age is when beneficiaries are eligible for 100% of the benefits they've earned based on their work records.) Yet few people wait until age 70 to claim benefits. While more than 90% of individuals would benefit from delaying Social Security until that age, only about 10% actually do, according to a 2023 paper from the National Bureau of Economic Research. While age 70 is not the official U.S. retirement age, it is the threshold based on economists' definition — the age at which you can't accrue any more benefits, according to Teresa Ghilarducci, a labor economist and professor at The New School for Social Research. "In the United States, it's been 70 for decades, and we had the highest retirement age than any other country for years," Ghilarducci said. Yet there are efforts to officially bump up the U.S. retirement age higher. In 1983, Congress passed legislation to gradually raise the full retirement age for Social Security from 65 to 67. That change is still getting phased in today, with people born in 1960 and later subject to the higher 67 retirement age. In December, an amendment to raise the full retirement age to 70 was introduced by Sen. Rand Paul, R-Ky., during last-minute efforts to advance legislation that increased Social Security benefits for certain public pensioners. The bill, the Social Security Fairness Act, was voted into law. However, the proposal to raise the retirement age was struck down. Paul called for raising the retirement age by three months per year until it reached age 70, to reflect current life expectancies. The change would have created nearly $400 billion in savings for the program, while the Social Security Fairness Act added $200 billion in costs to the program over 10 years. Other Republican proposals have likewise called for raising the retirement age. The Social Security Administration faces looming depletion dates for the trust funds it relies on to help pay benefits. To help resolve that issue, lawmakers may consider raising taxes, cutting benefits or a combination of both. Raising the retirement age is effectively a benefit cut. Like the changes enacted in 1983, raising the retirement age could be on the menu. Denmark's move to raise the retirement age to 70 is not a surprise, experts say. In 2023, research published by the Danish Center for Social Science Research found increasing good health and educational resources for 60- to 70-year-olds, along with higher demand for older workers, could point to retirement age increases in the future. In 2025, Denmark residents can retire with public pensions when they are 67. That will gradually increase to age 70 as of 2040. "That means simply that younger people today will have to work longer before they can go on retirement," said Jesper Rangvid, professor of finance at the Copenhagen Business School and co-director of its Pension Research Centre. That retirement age affects everybody entitled to basic public pension income, according to Rangvid. However, those with private pension savings may retire earlier. "There's nothing that prevents you from retiring earlier if you have the funds and the means to do so," Rangvid said. Denmark does offer options for early retirement, including an early pension. However, raising the retirement age conveys a message, Rangvid said. "It sends a signal that this is what the positions would like, that you should work longer," Rangvid said. Retirement experts say raising the U.S. retirement age may not present the same solution for the population that it does in Denmark. Denmark has a much more "equal society" when it comes to income, wealth, education and life expectancy compared to the United States, said Alicia Munnell, senior advisor at the Center for Retirement Research at Boston College. In the U.S., government data shows a stark difference between the life expectancy for those at the bottom and top income quartiles, Munnell said. "When you have such a big, big difference, any across-the-board increase in the retirement age would be foolish," Munnell said. "It'd be immensely harmful to those at the bottom who already receive benefits for a shorter period of time." A policy to raise the retirement age may also be problematic for another reason — it would take time to phase the change in, according to Andrew Biggs, senior fellow at the American Enterprise Institute. For example, Congress may enact a higher retirement age that starts to go into effect in 10 years, and then it would take 30 years for people with the higher retirement age to go through the system. While moving the age from say 67 to 69 would produce savings for the program in the long run, "they're going to need the money right now," Biggs said. The welfare reform that began in Denmark in 2006 — whereby the retirement age increased with life expectancy — has been "extremely important" for the country's economy, according to Rangvid. "We have basically no public debt at all," Rangvid said. In contrast, the U.S. faces high national debt that requires the country to spend more on interest payments than on the military. Budget legislation that is currently under consideration in Congress could add an estimated $3.3 trillion to the debt including interest, according to the Committee for a Responsible Federal Budget. That package would not touch Social Security or its retirement age. However, other proposals have suggested that change, a benefit cut that would be a "pretty powerful lever" toward helping to resolve the program's funding issues, according to Munnell. One proposal scored by the Social Security Administration's actuaries found raising the full retirement age to 70 would eliminate 26% of the program's 75-year shortfall.
