New drugs that are used to diseases and conditions such as hepatitis C, cancer and multiple sclerosis are estimated to rise by 7 percent in 2018. The rise has many employers’ bracing themselves for higher health care costs next year.
Estimates show that roughly 40 to 50 new drugs will hit the healthcare sector this year. The number is expected to rise for each of the next five years. According to Reuters, the new drugs could increase health care costs by an estimated $25 billion annually.
A survey conducted by Mercer shows the cost of specialty drugs increased 15 percent this year, which increased the costs of regular prescription drugs. According to Beth Umland, the director of research for Mercer, the problem is not the cost of a singular drug rising but all the new drugs that are hitting the market. Mercer states there are close to 2,320 new drugs actively being developed.
A new gene-modifying therapy for leukemia was awarded approval by the U.S., which could be the beginning of a paradigm shift in the way doctors treat cancer. However, the therapy costs $475,000. Tracy Watts, the U.S. health reform leader for Mercer, said the cost of prescription drugs will get worse before getting better since many popular prescription drugs are going off-patent.
The average cost for health costs per employee is expected to rise by 4.3 percent in 2018, according to Mercer. The forecast is the highest since 2011. Some employers may take steps to cut costs. Employers are eying implementing high-deductible health policies. Although these plans have lower monthly premiums, it shifts most of the health expense burden to patients holding the plans.
High-deductible plans are gaining in popularity among many employers as they try to cut medical costs. The drawback is employees who have these plans must pay more in out-of-pocket expenses.