Not only are you likely to notice your premiums increasing, but your out-of-pocket costs are also likely to increase. As discussed earlier in this article, the drug prices are increasing steadily (sometimes shockingly). Within that increase comes shifts in formularies.

As we touched on earlier, insurance companies sometimes control their costs by adjusting the percentage of services they cover. For example, let’s say you take Advair twice daily and your insurance company considers it a Tier 2 drug, for which they agree to pay 80% of the cost.

But if the company was interested in saving money on prescription costs, they may choose to bump it up to a Tier 3 medication and pay a smaller percentage of the cost. (It’s commonplace for new medications — especially if they’re innovative, such as Breo Ellipta — to start off at Tier 3.)

If the price of a medication is far more than they’re willing to pay, they may remove the medication from the formulary altogether, forcing fully covered enrollees to pay the retail price out-of-pocket.

This formulary shift is not a new strategy, by any means. Of course, the people it hurts the most are enrollees.

If out-of-pocket costs increase, people may not be able to afford their medication, so they may try to scale back. Oftentimes, trying to save money on medication turns into various forms of nonadherence, such as skipping doses, taking partial doses, or simply not taking it at all.

Of course, the cost of medication nonadherence is far more expensive than the medication itself, but people may not have a choice.

Inflation

In the final months of 2021, data from the Labor Department indicated that inflation had reached its highest level since the early 1990s.

According to the Consumer Price Index (CPI), inflation jumped to 6.2% in October — the largest increase in three decades. Compared to forecasts, actual inflation increased nearly 0.5% more than expected each month.

While it’s difficult to pinpoint the exact effect of inflation on pharmaceutical prices, we can assume that it doesn’t positively affect the problem. And unfortunately, given the current economic climate and global concerns, it’s unlikely that inflation will be under control any time soon.

The Federal Reserve will certainly be watching the markets closely and possibly making adjustments that they believe will slow the rate of inflation. Typically, this is achieved through interest rates — increasing them should lower inflation, but there are potentially negative consequences to such a decision.

This isn’t meant to become an economics forum, but the important thing to remember is that inflation has an impact on prices across the board. The higher inflation is, the more likely it is that prescription prices will increase as well.

Of course, this issue is even more complicated for senior citizens on Medicare. Between 2018 and 2019, the prices of 22 of the top 25 prescription drugs used by Medicare Part D enrollees increased above the rate of inflation. In the case of one cancer drug, the price increased by 10 times the rate of inflation.