WASHINGTON, D.C. – Provider markups on specialty drugs increased 2024 commercial health insurance premiums by $13.1 billion in 2024, according to new research from Oliver Wyman commissioned by AHIP. On average, providers charge 42% more than a specialty pharmacy for the same drug.
Specialty pharmacies lower health care costs by preventing hospitals and physicians from adding a markup when they buy and store specialty medicines themselves, even though they receive a separate payment for seeing the patient and administering the drug. When patients are administered a lower priced drug, premiums are lower for everyone.
“Patients, employers, and taxpayers shouldn’t pay more for a drug because of who supplies it,” said Sean Dickson, Senior Vice President, Pharmaceutical Policy at AHIP. “This research supports the role specialty pharmacies can play in lowering health care costs by preventing hospitals and physicians from charging patients, families, and employers higher prices to buy and store specialty medicines themselves.”
Other takeaways from the report include:
- Consumers and employers will pay on average $50 more for single coverage and $175 more for family coverage in premiums in 2024 due to the markups charged by providers to supply specialty drugs that could have been supplied by a specialty pharmacy.
- The total value of health insurance premiums and premium equivalents that could have been saved if providers charged the same price for specialty drugs as those available from specialty pharmacies would be as much as $13.1 billion in 2024.
- The cost of markups charged by providers on specialty drugs represents about 0.7% of total health expenditures.
The report was based on the 2021 MarketScan commercial data set, which contained detailed medical and pharmacy claims data for 19 million covered lives.
Specialty pharmacies improve health care affordability while protecting patient safety. AHIP continues to encourage lawmakers to support price competition among providers and specialty pharmacies for these medications and services.