SFOT RH 2026

Opinion: Pricing proposal gives patients a fair shake

by | May 30, 2019 | Opinion

Drug company CEOs recently ventured to Capitol Hill to testify before the Senate Finance Committee.

The executives got an earful from lawmakers, who are rightly concerned about drug spending. Senators are under pressure from voters, 80 percent of whom say “taking action to lower prescription drug prices” should be one of Congress’s top priorities this year.

To this end, the Trump administration recently proposed a rule that could save patients billions at the pharmacy. The rule would make it easier for Americans suffering from chronic diseases to afford needed medications. The reform could even drive down national healthcare spending.

The rule targets pharmacy benefit managers. Insurance companies hire these middlemen to administer prescription plans and negotiate with drug companies for discounts. Manufacturers offer discounts in exchange for PBMs agreeing to include drugs on “formularies,” the lists of medications that insurance plans cover.

The discounts secured by PBMs are substantial. Total discounts and rebates offered by drug companies ballooned to $150 billion in 2017. These discounts amount to roughly one-third of a drug’s list price.

If drug companies are offering ever-larger discounts, why do medicines seem to be getting more expensive for patients? It’s because insurers and PBMs keep these discounts to reduce premiums.

The lower premiums are nice, of course. But they provide minimal help to those who rely on medications and face high out-of-pocket costs.

For instance, a drug might have a list price of $300, but the insurer might acquire it for just $150 after rebates.

However, insurers don’t calculate coinsurance based on the negotiated price. If patients face 20-percent coinsurance, they’ll have to pay $60 every time they refill their prescriptions. If patients could pay coinsurance based on the discounted price, they’d pay just $30.

That $30 difference adds up for patients who take multiple drugs to manage their chronic diseases.

The Trump administration’s proposed rule would end this. It would prohibit PBMs from collecting rebates or discounts for medicines sold through Medicaid or Medicare Part D. Discounts and rebates would only be permitted if they were passed to patients at the pharmacy.

The reform would make it easier for America’s sickest patients to afford their medications. That could drive down overall healthcare spending.

Here’s why. Patients struggle to follow their treatment regimens when they face high out-of-pocket costs. When drug copays double, adherence falls by as much as 45 percent.

Non-adherence, a factor in 10 percent of all hospitalizations, costs our healthcare system between $100 billion and $289 billion each year.

Reducing out-of-pocket costs would improve medication adherence, thereby helping prevent needless suffering while saving our country billions.

Right now, the sickest patients pay a disproportionately high share of drug costs. The administration’s proposal would reduce out-of-pocket spending, helping more Americans afford the prescriptions they need to stay healthy.

 

By Kenneth E. Thorpe, professor of health policy at Emory University and chairman of the Partnership to Fight Chronic Disease.

SFOT RH 2026

0 Comments

FISD Grad

Related News

The turn of a phrase

The turn of a phrase

Columnist John Moore's mom always made the same dessert in the same bowl. The proof was in the pudding. Photo Mary Moore By John Moore | TheCountryWriter.com Early in life, I learned that adults had their own language. They spoke English, but it was interspersed with...

read more
Scouting for opportunities

Scouting for opportunities

Columnist John Moore still has a couple of things from his days in the Cub Scouts. A Scouting knife and many memories. Photo John Moore By John Moore | TheCountryWriter.com Scouting was once as common for kids as Cap’n Crunch and Post Toasties. Learning how to tie...

read more
Mom knew

Mom knew

By John Moore | TheCountryWriter.com Moms used to be more versatile. If you were in the back seat of the Buick, they could discipline you from the driver's seat and never swerve or knock the ashes off their Marlboro Red. My mom never smoked, so it’s possible...

read more
Better shop around

Better shop around

The first man cave columnist John Moore experienced was his grandfather's blacksmith shop. Today, John has his own man cave. Photo: John Moore By John Moore | TheCountryWriter.com In the North, dads have basements. In the South, they have shops. Both...

read more
The price was right

The price was right

Thanks to his grandmother, columnist John Moore knows the price of most items. Which will help if he's ever selected as a contestant on The Price Is Right. Photo John Moore By John Moore | TheCountryWriter.com Long before anyone knew who Drew Carey was,...

read more
Get your kicks

Get your kicks

Columnist John Moore (right) and his sister, Renee', are pictured on a 1966 trip to Carlsbad Caverns. Photo: Mary Moore By John Moore | TheCountryWriter.com Leaving Ashdown, Arkansas, was an event unto itself. When your family has one car, going anywhere was a treat....

read more
Milestones

Milestones

Columnist John Moore (bottom left) is pictured with his father, mother, and sister in 1965. Photo: Moore Family Photos By John Moore | TheCountryWriter.com In 2014, I was contacted by a newspaper in Tyler, Texas. Unbeknownst to me, the publisher of said...

read more
Out to eat

Out to eat

Columnist John Moore rarely went out to eat when he was young. But when he did, he had a pretty good idea where his family was going to dine. Photo: Moore Family Photos By John Moore | TheCountryWriter.com “Are we going out to eat?” was not a phrase my...

read more
Bulk fiction

Bulk fiction

Columnist John Moore bought a lot of books when he was young. He still has many of them. Photo: John Moore By John Moore | TheCountryWriter.com I’m not sure what fundraisers try to sell to grade school kids today, but when I was a kid, it was books. The...

read more
Sounding off

Sounding off

Columnist John Moore still listens to vinyl on the types of stereos on which he grew up. Photo: John Moore By John Moore | TheCountryWriter.com Transistor radios were a breakthrough in entertainment. Especially for young people. When they debuted in the...

read more
Subscribe 300x250 - Love