Manhattan Institute for Policy Research, Inc.

Rising prescription drug prices have become a major focus of public discourse over the past several years. While the costs of most prescription drugs have grown, the costs of specialty drugs have risen much faster than traditional medications.

This is a result of a complicated system where patients pay coinsurance rates or deductibles at the pharmacy based on a drug’s full list price, rather than the lower rebated price that a payer has negotiated with the manufacturer. As a result, many patients pay more for drugs through their insurance plan than they would if they paid out of pocket without insurance. The higher costs borne by consumers often lead to higher rates of prescription abandonment. Although New York State has taken steps to address this issue by passing budgetary measures to cap the growth of prescription drug spending in the State’s Medicaid program, more needs to be done to protect health care consumers. In 2017, NYHealth awarded the Manhattan Institute for Policy Research (MI) a grant to research how transparency reforms would affect drug pricing and reduce patients’ out-of-pocket costs.

Under this grant, MI conducted a two-part study to research how prices might be affected by several different transparency reforms. The first part of this study analyzed the New York State health care market to understand formulary structures and types of costs that patients pay out-of-pocket for selected classes of commonly used medicines. The second part of the study used this data to model the impact of several distinct transparency reforms on drug costs and patients’ out-of-pocket costs. MI shared its findings with journalists, policymakers, and other influential stakeholders across New York State, as well as with other states and nationally.

Read the report, “Cost-Sharing and Drug-Price Transparency in New York.”