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Drug market 'war' costs $93 billion annually: Higher prices lead to increased spending on utilization management

Rising drug prices have led to more stringent prior authorization and formulary policies, increasing the cost-sharing burden on patients.

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Stacks of pills and coins The complexity and cost of the system means that approximately 20% of prescriptions are never filled—leading to long-term health outcomes that carry high costs as well. (Photo: Shutterstock)

The pharmaceutical industry is experiencing an ongoing loop of increasing drug costs due to drug utilization management programs that are a response to higher drug costs, a new study in Health Affairs has found.

The report described an “escalating cycle” that results in $93.3 billion in annual costs—just for drug utilization management. Part of the impetus for this spending is the increasing use of high-priced specialty drugs, the report said. With costs to payers rising, they are implementing more stringent prior authorization and formulary policies, while increasing the cost-sharing burden on patients.

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