State Fair of Texas 2023 SFOT

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.

Collin College Farmersville Fall Registration 2023 250x300

0 Comments

Related News

Take the fall

Take the fall

One of my most vivid memories of fall happened during junior high. I was standing in the end zone prior to the start of a game. I could barely feel my fingers and toes. It was October, but it was unusually cold (Al Gore had yet to invent global warming). My shoulder...

read more
A product of our generation

A product of our generation

If we’re honest, some products aren’t that different from each other. But during the 50s, 60s, and 70s, our moms were extremely loyal to the ones they liked. And advertising had a lot to do with mom’s loyalty, and ours. Growing up in front of a large, RCA console TV...

read more
The simple life

The simple life

Our grandparents had it figured out. They lived life on their terms. Today, we live life on society’s terms. And the evidence that we regret it is all around. The first bit of proof that my grandfather and grandmother had control of how their day would go is the fact...

read more
Ya’ll come back now

Ya’ll come back now

He left me a message, so I called him back. It’s funny how, even if you haven’t talked to a childhood friend in a long time, the conversation picks up as if you had just spoken earlier in the day. “Remember that location you always said you’d like to buy one...

read more
Food for thought

Food for thought

They were called, “Victory Gardens.” And they were one of the weapons US citizens used to help win World War II. With the bad guys throwing everything at us that they could, in return, we were throwing everything at them that we could. By John Moore To Login to read...

read more
Baskin in the past

Baskin in the past

When our parents would take my sister and me from Ashdown, Arkansas to Texarkana, often they’d succumb to our begging and stop for ice cream. The only destination considered was Baskin-Robbins 31 Flavors. By John Moore To Login to read the full story or to subscribe,...

read more
Name that town

Name that town

If you grew up in a town with a unique name, there are likely many stories about how the name came to be. Also, you know the struggles of trying to explain them. If your town is small, few folks have heard of it and they have no idea where it is. “What’s the name of...

read more
Fear itself: spiders, snakes and more

Fear itself: spiders, snakes and more

A granddaddy long legs climbed onto my face while I was out brush hogging on the tractor. I’d like to apologize to the neighbor for his fence, chicken house, doghouse, clothesline, and for leaving the scene of an accident. By John Moore To Login to read the full story...

read more
When boy meets grill

When boy meets grill

Ever have one of those moments where something in your head says you need to do something, but you’re not sure why? Recently, a memory I have of my grandfather cooking on a charcoal grill sparked that little voice to give me a direct order. The instructions were to...

read more
Finding a home for things left behind

Finding a home for things left behind

his column appears in over 30 papers in the South. I’m always pleasantly surprised by the number of messages I receive and from where they come. Often, they’re related to a previous column and the person writing shares a memory or story that was stirred by what...

read more
Leaderboard American Heart Association