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Why Are RA Drugs So Expensive?

A recent report noted that prescription drug prices rose 13% last year. Most of the increase in costs is attributed to specialty drugs designed to treat chronic conditions. Rheumatoid arthritis drugs, primarily biologic medicines, represent specialty drugs with high costs.

While only representing 1% of the prescriptions filled, specialty drugs accounted for 31% of the total costs of medicines (Associated Press, 2015).1 In fact, the largest increase in healthcare prices over the past few years has been in pharmaceuticals (Liss, 2014).2 This is even prompting a war between insurance companies and pharmaceutical companies (Al-Faruque, 2014).3

Rituxan EOB

Why are RA biologics so expensive?

I’ve been on numerous biological medicines to treat rheumatoid arthritis. I’m thankful for these complex drugs – it’s clear that they slowed disease progression. I’m currently taking Rituxan. After a recent infusion, my insurance company sent an Explanation of Benefits (EOB) form showing the cost and coverage of the medicine and infusion services (see a photo of the form).

Cost, price structures, and mark-ups

The form shows that the charges billed by the infusion clinic for the Rituxan was $8,690 for 1,000 mg of medicine. I’m curious about the source of this cost and can only assume that this is the cost suggested by the drug manufacturer – sort of like a “suggested retail price.” The adjustments made by the clinic were for $1,615 making the final cost of the drug that the insurance company agreed to pay $6,367. The mark-up on Rituxan must be huge if the adjustment was that much less than the original cost. Insurance companies obviously know the price structures to medicines and know what price pharmaceutical companies and clinics will actually accept in order to cover their costs. Price structures for medical treatments are individually negotiated between insurance companies and hospitals/clinics. My clinic also charged for the infusion that included the nurse and equipment and for other pre-medication drugs like solu-medrol and Benadryl. The total cost of this infusion procedure was $7,641.

My out-of-pocket costs for infusions

My out of pocket costs were $764 due to co-pays and deductibles. Fortunately, Genentech, the manufacturer of Rituxan, provides a co-pay assistance plan and they covered $702 to help cover the costs. I receive eight Rituxan infusions a year making a total annual cost of such treatments $61,128. And that does not include other costs associated with my RA treatment including other medicines, doctor visits, blood tests, imaging, and surgeries.

Costs are passed onto the patient

Biological medicines are understandably expensive because of the research, development, and complex manufacturing processes involved. Such medicines also have extended patent protection over chemical pharmaceuticals in order to help drug companies recoup the extensive costs. Those costs are passed onto the patient.

Wondering about drug company profit margins

The wild difference in charged costs versus covered costs as shown on the EOB can only make one wonder about drug company profit margins. Clearly, biologics are big business. In 2010, Amgen’s Enbrel had over $3 billion in sales just in the United States (Alazraki, 2011).4 This represented 23% of Amgen’s annual sales.

The development of generic equivalents

Four RA drugs – HumiraEnbrelRemicade, and Rituxan – are among the top selling biologics in the United States (Calo-Fernandez and Martinez-Hurtado, 2012).5 And these biologics will loose their patent protection soon. This is the reason that so-called “biosimilars“, generic equivalents for biologics, are being developed and will soon be approved for patient use.

The real cost of Rituxan isn’t a mystery that I will likely solve any time soon. There are numerous pharmaceutical, insurance, healthcare system, and political players involved. But one has to avoid skepticism driving you to not take prescribed medicines that can help slow the disease progression. While issues of costs and insurance reimbursements need to be addressed, right now I’m just thankful for a medicine to treat RA, insurance coverage, and co-pay coverage by the pharmaceutical company.

This article represents the opinions, thoughts, and experiences of the author; none of this content has been paid for by any advertiser. The team does not recommend or endorse any products or treatments discussed herein. Learn more about how we maintain editorial integrity here.



  • rhonda
    5 years ago

    I work for a DR who has tried to explain this very question to me. Here is what he has told me. DR’s must bill the insurance company much more than the actual cost of the medication or the procedure you are having done. If the procedure really costs $2,000 the DR will bill $3,000 knowing that he will only get $2,000 from the insurance company. That’s why it is so much cheaper if you are paying cash. Before I had insurance my rheumatology visit was $195 because I was self pay now that I have insurance the very same visit is billed to my insurance for $325. It’s so confusing. I believe medication works the same way. The price of medication with out insurance is much cheaper than if you have insurance. After you add up all the costs of paying your insurance at work, copays and the headaches from dealing with them every time you need to switch a medicine or be pre approved for something its almost better to have no insurance at all. At the end of the day the only people making money are the drug company’s and the insurance company’s. It’s sad many people can not afford medicine that could improve there lives. I had a much easier time finding help paying for Enbrel before I had insurance. Now that I do have insurance I must get my script, fax to pharmacy, hope someone gets it, wait for pre approval, set up delivery, hope it comes, hope it works or else I will go through it all over again. Thanks for sharing Andrew. Sorry if I started rambling 🙂

  • Andrew Lumpe, PhD moderator author
    5 years ago

    Rhonda, thanks for the helpful information.

  • Connie Rifenburg
    5 years ago

    Andrew, you are always so spot-on! This has been one of the biggest issues for me. Please don’t get me wrong, I don’t begrudge the fact that you can get all but $62 paid for by the company who makes the drug, good for you! But, meanwhile, I’m in my 3rd month still struggling to find funding. I’m one of those that is lost on the fringes – Medicare Advantage doesn’t meet the criteria of the Drug Company’s assistance programs many times. When I had private insurane (prior to becomming fully disabled) I had no problem getting assistance from the drug company’s programs.

    Doesn’t it interest anyone else why these drug companies are willing to basically pay 90% of the cost of their drug that they want to charge you thousands for?

    Why isn’t our government looking into this huge abuse? The Medicare and Medicaid system are certainly being impacted by these huge charges and it would be a great savings if the drug companies only charged a resonable mark up on the drug that they end up paying for anyway. Right?

    No one could afford $7K every few months – (in my case, $2500 every month) and the drug companies might as well stop making the drug if you can’t buy it. Who is actually benefiting from this flip flop of money changing hands between the drug company and the insurance company?

    So is it because the drug company is basically using us as their un-paid guinea pigs to take their drugs. They are charging so much we can’t take it without assistance, and then, because they are paying for it they can monitor that you take it and its results are fed to them from your dr.

    Seems a cheap way to do human drug testing! I agree with you that I am grateful for a drug that makes my life bearable, but what would happen if the drug companies didn’t help us???

    Thank you for your research into this article and also for sharing your personal medical costs with us to show this very point. Most of us have our own EOBs with similar startling numbers broken down showing that the insurance company writes off so much money – at times writes off more than they pay and then I pay the “co-payment” “co-insurance” . What is this “co-” about? Because they negotiate a lower fee for the drug (or the drug company inflates the price so it LOOKS like the negotiated a lower price) and then that is the insurance company’s part of the “co”. You pick up the rest of the cost which is probably more than enough to cover the real cost of the drug.

    I have had to simply “let it go” (no-not the song) because to fret over the “why” and never get answers just creates stress which feeds the RA immune animals and make them roar!

    I would love to be a fly on the wall of heaven when these Drug company and insurance executives try to explain this all to St. Peter. 😉

    Happy Spring!

  • Andrew Lumpe, PhD moderator author
    5 years ago

    Connie, it is unfortunate that those on disability don’t usually qualify for the co-pay programs resulting in many patients not able to afford their treatments. Drug companies only discount their drugs 10-20% not 90%. That must keep it within their profit parameters. Andrew

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