JustCare

Tag: Rebates

  • Bipartisan agreement on how to keep drug middlemen from ripping people off

    Bipartisan agreement on how to keep drug middlemen from ripping people off

    A new bill in Congress would end some of the most egregious practices of Pharmacy Benefit Managers (PBMs), reports Annika Kim Constantino for CNBC. PBMs are the drug middlemen who negotiate lower drug prices from manufacturers and then tend to pocket the savings for themselves or the health insurers who own them. The bill sounds appealing, but the only way to ensure fair drug prices for Americans is to remove the PBMs from the mix and have the government negotiate drug prices directly with the pharmaceutical manufacturers, as every other wealthy country does.

    Right now, the PBMs are driving up drug costs and forcing millions of Americans to forgo or delay filling their prescriptions. The PBMs are also driving community pharmacies out of business by underpaying them for their services or steering customers to pharmacies that promote the PBMs’ financial interests. The Congressional bill would make it easier for people to use community pharmacies, help ensure the PBMs pay these pharmacies appropriately, and lower people’s drug costs.

    This bill is not the only bill attempting to address high drug costs and abuses by the PBMs. And, though it’s bipartisan, it’s not at all clear that it will become law. Because the insurers and PBMs are so powerful, Congress is often hamstrung in its efforts to address their bad acts. Three PBMs–Optum Rx, Express Scripts and CVS Caremark–control about 85 percent of the prescription drug market and are owned by big insurers.

    Fortunately, the FTC is also working to address PBM abusive and unfair practices harming consumers. It plans to sue the three largest PBMs, which control about 80 percent of the market.

    If passed, the bill in Congress would create a new model for paying pharmacies. For reasons I can’t explain, today, PBMs can reimburse pharmacies less than what the pharmacies pay for drugs. The bill also would require PBMs to pass along to patients 80 percent of the savings they negotiate. And, it would forbid PBMs from steering patients to brand-name drugs when lower-cost generics are available.

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  • Dozens of drug companies owe Medicare rebates from raising prices higher than the inflation rate

    Dozens of drug companies owe Medicare rebates from raising prices higher than the inflation rate

    The Biden Administration just announced that dozens of drug companies owe Medicare rebates from raising prices higher than the rate of inflation. As a result , hundreds of thousands of people with Medicare will save as much as $2,786 per dose of their prescription drugs.

    The Inflation Reduction Act (IRA) prevents drug price gouging–defined as price increases greater than the rate of inflation–by pharmaceutical companies. The IRA also caps out-of-pocket costs for each insulin drug at $35 a month and limits total out-of-pocket drug costs for people with Medicare through Medicare Part D to $2,000 a year beginning in 2025. Yet, Republicans are trying to repeal the IRA.

    In total, the Administration reports that pharmaceutical companies raised prices on 64 drugs more than inflation. For example, the price of Signifor, which treats an endocrine disorder, went up so much that people who use it could see a savings of $311 for a monthly dose of the drug beginning in January.

    President Biden is also heralding his Administration’s decision to allow the government to “March-in” and help bring down the price of drugs developed with federal funding, if the price is unreasonable. This march-in right has always existed but prior administrations have been reluctant to take the position that the government could step in if a pharmaceutical company charged an excessive for the drug.  Of course, the proof of this Administration’s commitment here is in determining that the price of a drug developed with federal money is too high and taking action. Time will tell.

    Meanwhile a story in Becker’s exposes extreme drug price increases for eight drugs, according to ICER.  The story suggests that insurers spent more than $1.3 billion in these drugs in one year. It’s not clear if that means that individuals paid higher premiums to cover the cost of the drugs, but presumably so. The question left unanswered is whether the insurers recouped that money they spent for these drug, through rebates, and left their enrollees’ holding the bag, a likely scenario.

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  • Will health insurers stop Congress from reducing their Medicare Advantage profits?

    Will health insurers stop Congress from reducing their Medicare Advantage profits?

    When health insurers lobbied to be able to offer Medicare benefits, they claimed that they could deliver more at a lower cost. But, years later they continue to cost significantly more per enrollee than traditional Medicare. Can they block Congress from reducing their Medicare Advantage profits?

    Right now, health insurers are making money hand over fist offering Medicare benefits. They control about $140 a month per enrollee in rebate dollars and another $40 minimum a month per enrollee in overpayments. They use all the tools in their tool box to receive tens of billions of dollars a year more than they should according to one conservative estimate. Consequently, the Medicare Trust Fund is being drained prematurely of its assets, and Medicare Part B premiums are rising quicker than they otherwise would. Moreover, people in traditional Medicare are paying 14 percent higher premiums to subsidize Medicare Advantage.

    For good reason, Democrats in Congress are looking at ways to reduce payments to Medicare Advantage plans to a level more on a par with traditional Medicare, reports Politico. So, the insurers are now using their enormous muscle to keep Congress from reducing their profits.

    The Democrats need the savings to pay for the package of policies they hope to enact, including lower drug costs for people with Medicare. Given Senator Manchin and Sinema’s allegiance to their corporate benefactors, the Democrats in Congress are not likely to get that money from lowering drug prices or raising taxes on the wealthy. If they succeed at limiting overpayments to Medicare Advantage plans, it will be despite an investment of millions of dollars in an onslaught of insurance industry ads misleading the public about the implications of reducing their payments.

    The insurers are making cuts “as toxic as possible,” according to an industry insider. To be clear, the cuts would not affect people’s premiums or access to care. Rather, they would eat into insurer profits.

    And, contrary to the insurers’ claims, Krysten Sinema and Joe Manchin will be responsible, if indirectly, for the deaths of thousands of people with Medicare because they are refusing to allow Medicare to regulate drug prices. Right now, thousands of people are dying needlessly because they cannot afford their medications. But, misleading the public is  the health insurers’ standard modus operandi. And, it works almost always.

    Here’s more from Just Care:

  • Insurers profit from Rx rebates, not patients

    Insurers profit from Rx rebates, not patients

    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:

  • 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.

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