A.M. BestTV: Soaring Prescription Drug Costs Drive Insurer Expenses

OLDWICK, N.J.--()--This A.M.BestTV episode explores how prescription drug costs are rising, fueled by new and generic drugs and by increased usage, at the same time that medical costs are trending down. Click on http://www.ambest.com/v.asp?v=prescription816 to view the entire program.

A.M. Best analysts Sally Rosen, vice president, and David Mitchell, senior financial analyst, highlighted those facts and others in a recent Best Special Report, titled, “No End in Sight for Escalating Prescription Drug Pricing Trend.” Go to http://www3.ambest.com/bestweek/purchase.asp?record_code=251161 to read the report.

“There is a dichotomy going on, with medical cost trends going down and prescription cost trends going up by double-digits,” said Mitchell. “The factors involved in this are new and very expensive drugs coming into the market, higher use of prescription drugs, as well as a noticeable increase in the use of generic drugs.”

Rosen and Mitchell discussed how the cost of bringing a new drug to market has increased tremendously, and said that the cost today can be as high as $5 billion, compared with $5-6 million 40 years ago.

“The pharmaceutical companies are trying to recapture some development costs in pricing the prescription cost when the drug goes to market,” explained Rosen.

Recent episodes of A.M.BestTV include:

  • Analysts Review the State of Rated Captives: The aggregated financial results for the subset of captive insurance companies followed by A.M. Best are better than results for the broader U.S. commercial insurance sector: http://www.ambest.com/v.asp?v=captivepanel816.
  • Charting a Course for Insurance in Cuba, the 'Country That Time Forgot': The thawing relationship between the United States and Cuba is revealing opportunities for insurance companies: http://www.ambest.com/v.asp?v=cuba816.
  • Captives Set to Become Vehicles for Analyzing Risk and Accessing Risk Capital: At the final day of the VCIA conference, captive experts said they expect captives to host more new risks, expand their geographic reach and tap new forms of risk capital: http://www.ambest.com/v.asp?v=vcia4816nc.
  • Captive Regulators Worried About Efforts to Lure Domicile Switchers: At the third day of the annual VCIA conference, captive regulators from South Carolina, Vermont and Tennessee review captive oversight, including a strategy that has some domiciles offering tax breaks to captives that re-domesticate: http://www.ambest.com/v.asp?v=vcia3816nc.

A.M.BestTV covers exclusive A.M. Best information and reports, targeted topics and key developments in the (re)insurance industry every Monday, Wednesday and Friday. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html. View A.M.BestTV episodes at http://www.ambest.tv.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2016 by A.M. Best Company, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Contacts

A.M. Best
Lee McDonald
Group Vice President, Publication and News Services
+1 908 439 2200, ext. 5561
lee.mcdonald@ambest.com

Contacts

A.M. Best
Lee McDonald
Group Vice President, Publication and News Services
+1 908 439 2200, ext. 5561
lee.mcdonald@ambest.com