A new study published in JAMA Network finds that when pharmaceutical companies raise the wholesale prices of their drugs and increase rebates to insurers, insurers profit and more than half of people with drug coverage pay more out of pocket. Pharma would like you to believe otherwise. Benjamin N. Rome, M.D. et al. determine that most people with drug coverage do not benefit from pharmaceutical company rebates.
Not surprisingly, over the three-year period between 2015 and 2017, the list price (wholesale price) of 79 brand-name drugs—many top-selling drugs, representing $67 billion in sales—increased nearly 17 percent. Insurers and pharmacy benefit managers (PBMs) saw a 5.4 percent increase in “net prices” during the same period. They received rebates that captured most of the price increase.
Overall, patients saw their out-of-pocket costs increase 3.5 percent. This small increase suggests that somehow the increase in net and list prices did not affect them much. However, the average increase is misleading.
Patients who pay deductibles and coinsurance for their drugs actually saw an increase of 15 percent in their out-of-pocket costs. The researchers could not find evidence that more rebates to insurers led to lower out-of-pocket costs.
Consequently, the researchers found that wholesale prices matter in terms of affordability of drugs for patients. Higher manufacturer rebates do not directly offset out-of-pocket spending by consumers. Pharma would like you to believe otherwise.
Put differently, the researchers found that net prices benefit insurers and pharmacy benefit managers who design their formularies in ways that help big Pharma sell more drugs. But, insurers often do not pass along their rebates to their members.
Pharma apparently agrees that insurers are benefiting from their rebates at the expense of their patients. There’s a simple solution. Ban rebates. Ban formularies. And, give everyone access to all the drugs they need at the same price. Otherwise, you’re forcing people into a game of Russian Roulette with their health. How could anyone possibly know what drugs they will need over time?
Here’s more from Just Care:
- Pharmacy benefit managers can drive up your drug costs
- Coronavirus: How to transform our broken prescription drug sector for the public good
- Risk to older adults of underuse of prescription drugs
- GAO finds US drug prices more than four times those in France
- The deadly consequences of out-of-pocket drug costs
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