For the past several years, lawmakers, health care professionals, and patient advocacy groups have argued that companies known as pharmacy benefit managers (PBMs) are driving up the cost of prescription drugs. Now, the Federal Trade Commission (FTC) is filing a lawsuit The largest PBM said to have increased insulin costs for diabetics.
These intermediaries control drug profits. Almost all health insurance plans In the United States, we negotiate prices with pharmaceutical companies and negotiate health insurance and benefits. PBM is service providerHealth plans and those acting on behalf of patients should be encouraged to design drug benefits so that patients have access to the best medicines at the lowest possible cost. But because of perverse market incentives, PBMs often profit when patients and their employers pay more for drugs.
Usually PBM negotiate Discounts on medicines with manufacturers on behalf of health insurance. This discount is commonly known as a rebate. These negotiations between manufacturers market access Teams and PBMs focus on how much medicine they can sell and the discounts they can give based on volume. When a drug is sold to a patient, rebates are passed from the manufacturer to the PBM and then to the plan. Health insurance pays for services to PBMs ratio In theory, it incentivizes PBMs to find increasingly larger rebates.
As described in detail, FTC reportthe process is distorted by perverse incentives. First, it led to negotiations in which the PBM proposed: block competition Even famous brand medicines. Blocking competition from name brand drugs increases the number of name brand drugs used by patients and increases the rebates manufacturers pay. This means that patients who want access to medicines sold by competitors often face step therapy and high costs, which prevents them from obtaining generic or biosimilar medicines. Regarding insulin, our agency suspect PBMs have chosen to target brand-name insulin drugs with higher list prices because they offer higher rebate payments. In exchange for paying these rebates, these intermediaries excluded cheaper insulin products from coverage. another High profile case PBMs argued that they financially punished doctors and pharmacies who dispensed drugs made by competitors, namely cheaper biosimilars.
That’s not the only sinister motive. PBM is allowed Designing benefits, such as health insurance, that are harmful to clients. However, health plans have a fiduciary obligation to the federal government to administer their benefits. ”just by itself The purpose of the plan is “the benefit of the participants”.
The final perverse incentive is a well-intentioned provision known as the Patient Protection and Affordable Care Act. medical loss rate (MLR). The MLR requires health insurance companies to spend 80 to 85 percent of a patient’s premium on medical claims, including pharmacy claims, and can keep 15 to 20 percent for overhead and profit. Because percentages have caps, not amounts, insurance companies can merge with PBMs, increase the drug costs charged to patients, direct patients only to their own pharmacies, and ultimately end up collecting money in court. You may end up repaying artificially high drug costs that you would otherwise not have had to pay. fair market. Instead of having an incentive to reduce costs, MLR can incentivize health insurance companies to increase costs.
and that is what exactly happened. The three largest PBMs are all integrated with insurance companies and have their own pharmacies. one case study Insurers integrated with PBMs were found to pay their pharmacies 30% more than independent pharmacies, increasing out-of-pocket costs for seniors trying to fill prescriptions.
Policy makers recognize the need to make changes to PBMs for the benefit of patients. both the House of Representatives and the Senate advanced law It would bring transparency to rebate and benefit design within private health insurance, Medicare, and Medicaid. Sen. Elizabeth Warren (D-Mass.) and Sen. Mike Braun (R-Ind.) signed the letter jointly On the need to investigate the role of MLR in increasing insurance costs. Additionally, Brown and Republican Kansas Sen. Roger Marshall submitted an amendment That would put PBMs under the same fiduciary responsibility as employers and make them equally responsible for patient needs.
Our health system should not be designed around the needs of middlemen. It should also be effective for you, the patient.
Bobby Jindal served as Governor of Louisiana (2008-2016) and Assistant Secretary of Health and Human Services (2001-2003). Charlie Katebi is deputy director of the Center for a Healthy America at the America First Institute for Policy Studies.
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