Insider Q&A: A front-row seat for the drug pricing battle
http://www.charlotteobserver.com/news/article105514881.html
I have blogged about MIDDLEMEN in the prescription distribution system. There has been recent information that these PBM’s – Like Express Scripts – are “demanding” rebates/kickbacks from the manufacturers of up to 70% to keep the manufacturer’s product(s) on the PBM’s formulary… What is not clear is where the monies from that 70% goes… Over the last four years, Express Scripts’ net profits – based on Earnings Per Share (EPS) is UP > 50%. It is also claimed that some of this money goes back to the insurance company and or the company that pays the insurance premiums or if the company is self insured… funds the employee’s health costs.
What few seems to know if the insurance company and or self funded employer calculate premiums or the employee’s share of premiums based on “rack rate” of all medical costs charges… does not include all discounts/rebates/kickbacks. So an employee whose “share” of the employer’s health insurance cost is say – 30% – but if the employer did the calculation on net costs.. the employee may be actually paying 60% or more of the net health insurance premium costs.
So if anyone wonders why prescription medication costs have “gone thru the roof”… it would appear that the for-profit motive of all these middlemen that has entered the market place since 1970… could share the blame for the”lion’s share” of the all the soaring price increases in prescription medications.
In the late 60’s, when there was few generics and no middlemen… the average prescription price was in the $4 -$5 range. Since 1970… I can identify three different categories of for profit middlemen in the prescription distribution system… there could be more …that are not so obvious ?
Dr. Steve Miller, the chief medical officer of Express Scripts, sits at the center of the storm over rising drug prices.
His company runs prescription plans for employers and insurers that cover around 85 million people. It buys enough drugs to fill more than 1 billion prescriptions a year.
Miller has watched super-sized drug prices infuriate patients and strain the health care system with growing frequency, starting when a new hepatitis C drug hit the market at $84,000 for a course of treatment and continuing through the recent revelation that the price of Mylan’s EpiPen rose more than 500 percent since 2007.
The company uses its buying power to push drugmakers for discounts, and Miller frequently criticizes both the amounts drugmakers charge and the patient assistance programs they offer.
Drugmakers, on the other hand, say these pharmacy benefits managers, or PBMs, are among the layers of middlemen inflating costs.
Miller spoke recently with The Associated Press. His comments have been edited for clarity and length.
Q: Why do you oppose the coupons that Mylan and others offer to customers?
A: The patient pays only a small part of the drug cost. It’s their employer or their insurance company that pays the vast majority. So giving that co-pay assistance does nothing to lower the price for the U.S. health care system, and every patient pays for it in the form of their (insurance) premium.
Q: Employers and insurers pay you to process prescriptions. Isn’t your company part of the pricing problem?
A: We are part of the pricing solution. If you did not have PBMs you’d invent a PBM, because what we do is we aggregate a huge number of patients, and we can drive enormous discounts.
Q: What ultimately stops this pattern of steep price hikes for prescription drugs?
A: Historically, providers of health care never took advantage of the times they had their monopolies. Over the last decade or two, we’ve seen the tattering of that social contract.
We have really been encouraging the leaders of the pharmaceutical industry to adhere to that social contract, and we’re seeing some progress.
Q: Will profit-hungry investors buy into that contract?
A: If a pharmaceutical manufacturer demonstrates scientific innovation, brings new products to the market, we’re going to work with them to make sure patients have access to the products. They’re going to be successful, patients are going to healthier and society’s going to be better for it.
Q: These price hikes seem to be popping up all the time now. What are the chances the average consumer’s going to run into sticker shock at the pharmacy counter?
A: The advent of health plans with high deductibles is making it more common. In the past, people had flat (co-payments), which means that you paid either $10 or something similar. Now these plans have gone to percent co-pays. Even if your percent is low, if you have a $10,000 drug, that means a high co-pay.
We’re seeing high drug prices, and we’re seeing more and more patients with high-deductible health plans.
Q: What is the next area of treatment where we may see some soaring drug prices?
A: Consider how devastating Alzheimer’s is, anyone who comes to the market with a treatment would have unlimited pricing power. How much would you be willing to pay for your spouse who is suffering with Alzheimer’s? Anything.
Filed under: General Problems
One thing that no one seems to adress are those without insurance that covers prescriptions, and there are more of them than you think! Those people pay the FULL inflated cost for medications! Often this means doing without basic lifesaving drugs such as insulin or epipens!