The California Department of Managed Health Care released the Prescription Drug Cost Transparency Report for Measurement Year 2019
The report looks at the impact of the cost of prescription drugs on health plan premiums and compares data over three reporting years: 2017, 2018, and 2019. The report reveals that health plans paid an increase of $1 billion — $1 billion! — on prescription drugs since 2017, including an increase of $600 million in 2019.
The report is seen as part of a larger effort by California Governor Gavin Newsom to rein in the costs of prescription drugs. Newsom has proposed leveraging California’s purchasing power to increase generic drug manufacturing as one solution to the prescription drug affordability crisis. The state has already begun to identify potential target medications and develop a strategic plan to promote state-led generic drug purchasing and manufacturing. California is also transitioning all Medi-Cal pharmacy services from managed care to direct state payment in 2021, strengthening California’s ability to negotiate better prices with drug manufacturers.
Other key findings from the recent DMHC report include:
- Health plans paid more than $9.6 billion for prescription drugs in 2019, an increase of almost $600 million from 2018, and $1 billion from 2017.
- Prescription drugs accounted for 8% of total health plan premiums in 2019, a slight increase from 12.7% in 2018.
- Health plans’ prescription drug costs increased by 6.3% in 2019, whereas medical expenses increased by 5.2%. Overall, total health plan premiums increased by 5.3% from 2018 to 2019.
- Manufacturer drug rebates totaled approximately $1.205 billion, up from $1.058 billion in 2018 and $922 million in This represents about 12.5% of the $9.6 billion spent on prescription drugs in 2019.
- While specialty drugs accounted for only 1.5% of all prescription drugs dispensed, they accounted for 1% of total annual spending on prescription drugs.
- Generic drugs accounted for 5% of all prescribed drugs but only 20.9% of the total annual spending on prescription drugs.