CDI, DMHC Issue First Prescription Drug Cost Transparency Reports

The California Department of Insurance (CDI) and the California Department of Managed Health Care (DMHC) recently issued their first Prescription Drug Cost Transparency Reports as required by SB 17 (Hernandez, Chapter 603, Statutes of 2017). The reports present information from health insurers and health plans in California about covered prescription drugs, including the 25 most frequently prescribed drugs, the 25 most costly drugs by total annual plan spending, and the 25 drugs with the highest year-over-year increase in total annual plan spending. This reporting requirement by insurers and plans is intended to demonstrate the overall impact of drug costs on health insurance premiums in California. Notable findings from the reports include:

Department of Insurance Report

  • CDI-regulated health insurers and their policyholders spent over $1.2 billion on prescription drugs in 2017
  • Generic drugs comprise 84 percent of prescriptions and 21 percent of spending while specialty drugs comprised three percent of prescriptions but 52 percent of spending
  • The cost of prescription drugs (after rebates) is 13.4 percent of premiums
  • The 25 most costly specialty drugs alone accounted for more than a quarter of the total annual spending for all drugs

Department of Managed Health Care Report

  • Health plans paid nearly $8.7 billion for prescription drugs in 2017
  • Prescription drugs accounted for 13.1 percent of total health plan premiums
  • Specialty drugs accounted for 1.6 percent of all prescription drugs, but accounted for 51.5 percent of total annual spending on prescription drugs
  • Generic drugs accounted for 87.8 percent of all prescribed drugs but only 23.6 percent of the total annual spending on prescription drugs
  • Health plans paid 91.2 percent of the cost of the 25 most costly drugs across all three categories of generic, brand name, and specialty drugs

The full CDI report is available here and the DMHC report is available here.