JustCare

Tag: PBMs

  • Bi-partisan legislation could reduce drug middlemen profits, but unlikely to reduce drug prices

    Bi-partisan legislation could reduce drug middlemen profits, but unlikely to reduce drug prices

    Stat News reports that bi-partisan Senate legislation to address unexpected medical bills includes legislation that could bring down the profits of the middlemen who buy drugs from pharmaceutical companies on behalf of health insurers. But, the legislation does not hurt pharmaceutical company profits or in any way ensure uniformly lower drug prices. We need Congress to regulate drug prices.

    Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA), who head the Senate health committee, have crafted a bill that would stop Pharmacy Benefit Managers (PBMs) from being able to keep for themselves the difference between the price the PBM charges an insurer, such as Medicaid, for a drug and the price it pays the pharmacy for the drug, “the spread.” The spread could be many times the pharmacy price, as Bloomberg reports.

    The bill does not appear to hurt pharmaceutical companies. Indeed, it could help them. They might be able to take advantage of this law to raise the wholesale price of drugs and profit more without affecting the price people pay for them.

    If this legislation is enacted, PBMs also would have to report more information about the amount they pay for drugs and the amount of the rebates they get. Their clients, Medicaid and commercial insurers, would receive all rebates and discounts. This would likely put an end to, or significantly reduce, rebates and discounts. It also could mean that insurers pay PBMs more for their services. Would it bring down drug prices?

    Under the legislation, PBMs would pay a penalty of $10,000 a day if they did not comply. For PBMs, $10,000 a day is a drop in the bucket. They are multi-billion companies for whom $3.65 million a year is chump change. In 2017, they earned $223.7 million from the spread on Ohio Medicaid alone.

    In October 2018, the Patient Right to Know Drug Prices Act became law. It forbids gag clauses, which have kept pharmacists from telling patients when the actual price of a drug is less than its copay.

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  • Hospital upcharges for prescription drugs provides further justification for federal government drug price negotiation

    Hospital upcharges for prescription drugs provides further justification for federal government drug price negotiation

    A new report by Pharma, the trade association for drug manufacturers, looks at hospital upcharges for prescription drugs and provides further justification for federal government drug price regulation. The report suggests that hospitals are making a bundle off of prescription drugs.

    According to Pharma, which analyzed the prices hospitals charge for all hospital-administered drugs, on average, hospitals charge almost five times (479 percent) the price they pay for these drugs.  Just over half of hospitals (53 percent) charge between two and five times the cost of these drugs. One in six hospitals, 17 percent, are charging at least seven times their cost.  And one in twelve hospitals (8 percent) are charging more than ten times the price they pay for them.

    Uninsured patients may get hit with these exorbitant drug charges in full. Insurers generally pay a negotiated rate for the drugs their enrollees receive in hospital. That negotiated rate is typically more than twice the price that hospitals pay for the drugs, and less than what hospitals charge the uninsured. It’s no wonder the public wants Congress to address health care costs.

    These excessive hospital charges mean ever higher health insurance premiums for Americans.  They also drive people into medical bankruptcy or force them to forego necessary medicines.

    Congress should not permit hospitals to hike up the price of drugs beyond a small administrative fee.  And, health insurers, along with Pharma and the general public, should be calling on Congress to pass legislation that forbids this behavior.

    Unfortunately, our commercial health care system permits pharmaceutical companies, Pharmacy Benefit Managers (PBMs) and the insurance industry, in addition to hospitals, to make out like bandits when it comes to what they charge for drugs. Pharmaceutical companies like to shift blame to hospitals and PBMs for their markups. And, insurers and PBMs tend to keep quiet about the high price of prescription drugs, enjoying the riches they reap from the failure of Congress to negotiate one fair price for everyone.

    It’s time Congress stepped in to negotiate fair drug prices for everyone in this country. If Germany and Japan can do it, so can the US.

    If you want Congress to rein in drug prices, please sign this petition.

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  • Insurers drive up costs for people with diabetes

    Insurers drive up costs for people with diabetes

    The Hill has an opinion piece on a new way that insurers are increasing their profits. Insurers drive up costs for people with diabetes, making it harder for them to get needed care. Instead of applying drug copay coupons toward people’s deductibles, insurers make them pay their deductibles out of pocket.

    Insurers would rather steer clear of patients with diabetes, because they use a significant amount of health care. So, insurers are imposing an additional financial obstacle for them to get care. They are taking advantage of the fact pharmaceutical companies offer people with diabetes drug copay coupons; and, they are effectively appropriating the value of those coupons for themselves. Insurers now require patients to pay their deductibles in full out of pocket rather than allowing them to use their drug copay coupons toward their deductibles.

    Insurers have a series of crazy names for this new policy: “Copay Accumulators,” “Out-of-Pocket Protection Programs” or “Coupon Adjustment: Benefit Plan Protection Programs.” Whatever insurers name the policy, it means that people with diabetes and other costly conditions who benefit from drug company coupons that help with their cost-sharing have to pay their full deductible out of pocket before their care is covered.

    In a more just health care system, people with diabetes would not have to worry about the cost of their insulin or about meeting a deductible. And pharmaceutical companies would be required to charge fair prices for their insulin. They would not be able to hand out discount coupons that end up benefiting themselves and insurance companies more than patients.

    There are now 30.3 million adults in the US with diabetes. And, they are increasingly struggling to get needed care. Over the last 15 years, costs for insulin have more than tripled. Moreover, pharmacy benefit managers (PBMs) are no longer covering many medications and supplies that people with diabetes need. (Another 84.1 million adults have pre-diabetes, a condition which, if left untreated, tends to lead to type 2 diabetes within five years.)

    There are insulins, including NPH, which are far less expensive than the newer insulins. NPH is available without a prescription for less than $30 a vial at some pharmacies. NPH works, but it is harder to manage blood sugar with NPH than it is with more expensive insulins—Humalog or Lantus.

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  • Doing away with drug rebates alone will not bring down drug costs

    Doing away with drug rebates alone will not bring down drug costs

    Pharmaceutical companies charge too much for their drugs. And, they probably charge more because they pay pharmacy benefit managers (PBMs) rebates. (PBMs decide which drugs will go on an insurer’s formulary at what copay level.) But, simply doing away with drug rebates likely will not bring down drug costs.

    We need to eliminate both the rebates and the PBM middlemen, which are in the business of choosing drugs and copays for insurance company formularies based in no small part on how much pharmaceutical companies pay them to promote particular drugs. These perverse incentives undermine the public health.

    Neither PBMs nor health insurers, which also benefit from rebates, should be steering people to drugs based on how much these companies profit from them. These misaligned incentives result in some drug formularies including brand-name drugs but not the generic substitutes.

    Pharma says it does not like the rebate system and wants to “delink” it from the drug’s list price, Katie Thomas reports for The New York Times. My read: Pharma feels that pharmacy benefit managers, insurers and pharmacies are getting too much money from the sale of prescription drugs, and it wants a greater share of that money.

    It is hard to imagine that eliminating rebates would lead drug companies to lower their prices. When was the last time a drug company lowered its prices? Moreover, drug companies will always find ways to pay distributors to promote their drugs over others, to pay doctors to prescribe their drugs through speaking fees and other gifts, and to pay individuals to take their drugs through copay coupons and the like. That’s how they increase sales and profits.

    To be sure,  Americans would benefit most if the federal government regulated all drug prices and had an independent agency determining which drugs add value and which are unsafe and ineffective or overpriced relative to other drugs on the market.  That’s what the UK, France and Italy do.

    HHS Secretary Azar recognizes that everyone in the drug supply chain makes money off of the drug’s list price. He suggests that it might be time to eliminate rebates. But, even if rebates go, don’t assume that ordinary Americans will benefit.  It will mean more money for Pharma and less money for PBMs, insurers and pharmacies. And, in all likelihood, to make up for that lost revenue, they will find ways to drive up health care costs for individuals even further.

    If you want Congress to rein in drug prices, please sign this petition.

    Here’s more from Just Care:

  • Trump shows his support for big Pharma

    Trump shows his support for big Pharma

    President Trump’s blueprint to address prescription drug prices reveals his desire to ensure big Pharma thrives. It represents another broken campaign promise. Indeed, it was such a relief to Pharma investors that stock prices for pharmaceutical companies and pharmacy benefit managers rose following Trump’s release of his plan. What’s wrong with Trump’s plan and why are the drug companies and their investors so happy?

    1. The plan leaves power in the hands of pharmaceutical companies to raise prices enormously in the US and encourages them to raise prices around the world. The President appears fine with the prices Americans pay for drugs. He just wants pharmaceutical companies to charge other countries more for them.
    2. The plan does little or nothing to help people with Medicare or complex conditions needing astronomically priced drugs. It does not support Medicare drug price negotiation, let alone drug price negotiation for all Americans, which is what is needed. It suggests that there is some way for Part D plans to better negotiate without specifying what that way might be.
    3. The plan would allow some Medicaid agencies not to cover certain critical prescription drugs. This could mean that some people with Medicaid may be forced to go without needed medicines.
    4. The plan does nothing to address the pharmaceutical industry practice of keeping their drugs on patent and keeping generic substitutes off the market through a variety of tactics.
    5. The plan does not encourage drug innovation to address major public health issues.

    Just to say it, President Trump does not single out the pharmaceutical companies for price gouging but rather suggests that other parties are to blame, particularly the Pharmacy Benefit Managers and lobbyists. Since pharmaceutical companies set the prices and quash generic competition any way they can, Trump gives them a free pass. Or, perhaps, a multimillion dollar pass, given that Novartis paid $1.2 million to Trump’s lawyer and lord knows how much other pharmaceutical company money traded hands with Trump’s team.

    Trump’s plan appears to throw consumers a bone or two, but appearances can be deceiving.

    • For people with Medicare Part D, HHS could lower out-of-pocket drug costs. But, would that simply lead Part D plans to increase premiums?
    • Trump seems to want to limit the power of Pharmacy Benefit Managers (PBMs) to benefit from drugmaker fees and rebates at the expense of people buying the drugs. But, it is not clear what that will mean for consumers.
    • HHS might address the ability of drugmakers to give rebates off the list price of drugs. Again, that is not likely to deliver a net benefit to consumers.
    • HHS could limit increases in prices drugmakers charge under Medicare Part B.

    Meanwhile, the Hill reports that House Republicans might actually pass a bill that addresses high prescription drug prices. They are working on a “compromise” to the CREATES Act, which might help speed more generics to market. Some Republicans say that they are concerned that the bill would lead to “frivolous lawsuits” against drugmakers. Of course, the drugmakers are using every arrow in their quiver to keep the CREATES Act from being enacted in any form.

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