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Workplace health plans pay up to 30 times more than Medicare for specialty drugs

Policies to reduce employer-sponsored insurance prices for physician-administered drugs are needed because they threaten access to innovative and lifesaving products for half the U.S. population, concluded a JAMA report.

Employer-sponsored health plans pay more for physician-administered drugs than Medicare does – in some cases, a lot more.

“Prices for physician-administered drugs among people with employer-sponsored insurance (ESI) have risen substantially over time, threatening access to lifesaving medication,” according to research reported in the JAMA Health Forum. Researchers at the Healthcare Cost Institute compared per-unit prices for the 10 most expensive and 10 most common physician-administered drugs from 2016 to 2020.

  • For the most commonly used drugs, ESI plans paid prices up to 3,350% higher prices than Medicare.

  • For midazolam (an injection commonly used before a procedure to cause drowsiness), employer plans paid 30 times more than Medicare for the same drug, and they paid 20 times more for ondansetron (prevents nausea and vomiting before chemotherapy).

  • Employer markups are not as extreme for the most expensive drugs. Markups were 54% more than Medicare at the high end, and employer-sponsored plans paid similar prices to Medicare rates for some drugs.

Among the top-spend drugs in 2020, the highest ESI price markups over Medicare were for pegfilgrastim (54%), trastuzumab (33%), nivolumab (24%), pertuzumab (22%) and rituximab (20%). By contrast, prices of bevacizumab, natalizumab and vedolizumab were similar for ESI and Medicare.

Price markups increased between 2016 and 2020 for five of the top 10-spend drugs and more than doubled for three oncology patient drugs (pegfilgrastim, trastuzumab, and rituximab). Unit prices were substantially lower for nearly all of the top 10 drugs by use compared with the top-spend drugs, but ESI markups were higher.

ESI unit prices were derived from claims and may differ from actual negotiated prices, researchers noted. Furthermore, other research has found different prices among sites of care (office vs outpatient), and the study didn’t account for this variation.

“High ESI prices for physician-administered drugs raise overall spending and threaten access to innovative and lifesaving products for close to half of the U.S. population with health insurance through their employer,” the study concluded. “Policies to reduce ESI prices for physician-administered drugs will be important. These efforts are needed for both low-price, commonly used drugs and the most-expensive drugs.”

BenefitsPro Reporter: Alan Goforth


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