Rising Drug Costs Affect Everyone


You’ve probably heard by now that the price of the life-saving EpiPen auto-injector has ballooned by 400 percent since 2007. The EpiPen is just the latest pharmaceutical to grab headlines in a series of recent drug-price hikes that also include insulin and Albuterol, a drug used to treat asthma. While drug price hikes affect some families more than others, drug prices will impact every West Virginian, even if you don’t actually use the medication yourself.


Here’s how that works.  

Kimberly Earl’s youngest son is asthmatic and allergic to peanuts. His newest EpiPen prescription cost the family $500, and he’s not the only one with medication needs.  

“I have a 13-year-old who’s a pediatric cancer survivor,” Earl said. “I have two children who are allergic to foods, medications and environmental factors, and both of those children both have asthma.”


The Earls have Blue Cross Blue Shield of Texas that they purchase through Mr. Earl’s employer. It’s a high deductible plan, which means they have to pay $10,000 out of pocket before their insurance kicks in.


Last year two of the Earl’s four children needed new EpiPens, but the Earls didn’t have enough money for two boxes at the $600 price – even with a $100 discount from the drugmaker Mylan Pharmaceuticals.


“Allergy kids who experience anaphylaxis should carry two pens at all times, because rebound reactions can occur within 20 minutes,” Earl said. “So if you don’t have medical help within those 20 minutes and they start to swell, you administer a second pen. We took the pens and we split the two pens between two kids. And I actually took the pens out and wrote on the top ‘use this one first’ on the current pens [and] ‘use this one second’ on the expired pens. So each kid was walking around with one current pen and one expired pen, and we were just hoping that if there was an issue they wouldn’t have to use that second pen.”


But for West Virginians with Medicaid, drugs like EpiPens are free. 


“Medicaid is quite a different system than private insurance,” said James Becker, M.D., the medical director for West Virginia Medicaid. Medicaid provides health care for those below a certain income threshold and at-risk members of society, such as people with disabilities. Since West Virginia expanded Medicaid under the Affordable Care Act, Medicaid now covers more than a third of its residents.


Medicaid is ultimately it’s through state and federal taxes. Basically, taxes become general revenue, which are the dollars that are spent in the budget. The WV Department of Health and Human Resources and other state agencies present a budget to lawmakers. When approved, money from that agency budget helps pay for programs such as Medicaid.

“So when the cost of a drug goes up dramatically, that impacts our system, and we have to step in and make adjustments to regulate the drug appropriately,” said Becker.


Let’s break this down further. One way the health department can regulate the cost of drugs is by negotiating for lower prices through the federal rebate program. The federal rebate program is a complex system, but basically comes down to the more Medicaid patients, the more bargaining power with drug companies to lower prices. Another way Medicaid manages costs is by using older, cheaper, but still effective drugs.


But even with these measures, more costly drugs mean that the department has to shift around funds to accommodate higher costs.


“Certainly for Medicaid funding in West Virginia that’s a huge cost,” said former WV Senate Health Chair Ron Stollings. “And so when we have to put money into funding Medicaid, we have to cut funding for higher education and secondary education, we have to put off paving projects, etcetera.”  


Stollings says rising Medicaid costs – partially due to higher drug costs – also may mean that you, the taxpayer, may end up paying more taxes to fund the budget, given that Medicaid must absorb the higher drug prices – even if you don’t actually use the drug yourself.


“If it costs more to deliver a service, then insurance basically spreads the risk over a large population so the entire population that’s covered then has to pay more,” said Stollings.

So, “if you’re a taxpayer, it impacts you,” he added. “If you’re insured, it will impact your premiums. And if you are on Medicaid, you may get this expensive medication, but they may be ratcheting down coverage for other things.”


So the bottom line is that no one is immune to drug price increases. A family with private insurance may feel the pain immediately by having to make tough decisions about what kind of drugs to buy [and] when, and by rising monthly premiums. A Medicaid family may not get the same sticker shock, but is certainly affected. 


Editor’s Note: This story was updated on 9/28/2016.


Appalachia Helth News

Appalachia Health News is a project of West Virginia Public Broadcasting, with support from the Benedum Foundation.