reed porter
Yet another legislative session adjourned in Colorado over questions surrounding a prescription drug board created to reduce high out-of-pocket costs for patients, this one over a recent visit from the U.S. Department of Health and Human Services (HHS). This reflects how a similar question developed. ) Secretary Xavier Becerra. Although he emphasized the importance of increasing access to care and lifesaving prescription drugs, he did not address the need for insurance companies and their intermediaries to be part of Colorado’s solution.
Just a few weeks ago in Washington, D.C., Becerra pointed out that intermediaries are part of the affordability problem, saying, “They’ve always been skimming money off the top. They’re putting resources where they’re needed most.” The problem is how to secure it.” : With consumers, not with intermediaries. ”
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Insurance companies and pharmacy benefit managers (PBMs) make significant profits from the sale of prescription drugs. Insurance companies and their PBMs capture more than half of every dollar spent on drugs. Where are you going? According to America’s Health Insurance Plans (AHIP), a health insurance industry trade group, a higher proportion of a patient’s premium goes toward insurance company overhead and profits than toward the patient’s prescription drugs. In fact, many insurance companies derive most of their profits from his PBM drug benefits business.
This is how it happens.
Insurance companies and their PBMs create medical plans and formularies (lists of drugs covered by health insurance plans) that determine what drugs are available to patients and their out-of-pocket costs at pharmacies.
To be included on these lists, biopharmaceutical manufacturers often offer these intermediaries significant rebates that reduce the cost of the drug. Instead of passing these savings directly to Coloradans, intermediaries can use these rebates to increase their own profits.
Additionally, intermediaries often require patients to pay deductibles or coinsurance based on the full price of the drug, rather than the negotiated lower price for the drug that the intermediary actually pays.
Finally, insurance companies and PBMs too often refuse to cover lower-priced versions of drugs that biopharmaceutical companies bring to market. Similarly, PBMs are increasingly excluding lower-cost, FDA-approved generic and biosimilar drugs from prescriptions and instead covering higher-priced brand-name drugs.
Perverse incentives in our health care system allow insurance companies and intermediaries to pay more for more expensive drugs, even if it means increased cost-sharing for patients and undermines adherence to safe and effective medications. Get priority and get bigger rebates. Thankfully, many experts, including the FTC and a growing number of states and bipartisan leaders in Congress, are paying attention to this issue and it needs to be addressed.
Insurers and PBMs frequently claim that attempts to reform these practices will increase premiums for patients, but this fear-mongering claim is only valid in states that have already taken steps to protect patients. has been disproved by. Recently, PhRMA commissioned a study on his 2023 Arkansas law that would require health plans and her PBMs to pass manufacturer rebates directly to patients at the point of sale. The study found no evidence that insurers and their PBMs would require significantly increased premiums to share cost savings with customers at the point of sale. So what’s stopping Colorado from taking action?
Colorado passed related legislation in 2023, but there is no guarantee that rebates or discounts will reach patients in stores. State policymakers looking to help Coloradans save money on prescription drugs should improve the law with language that requires manufacturers to offer manufacturers rebates and discounts to patients at the pharmacy counter. .
The facts are clear. Health insurers and their PBMs are passing more costs onto patients through high deductibles and coinsurance, while reaping savings that can be passed directly to Colorado families.
Until federal and state officials, including the Colorado Prescription Drug Board, address these intermediary issues, insurance companies and PBMs will continue to prioritize profits over the health and well-being of Coloradans.
Reed Porter is the senior director of state communications for Pharmaceutical Researchers and Manufacturers of America (PhRMA).
