Spotlight focused on pharmacy benefit managers over exorbitant cost of select drugs
The difference is stark when it comes to specialty drugs needed by patients suffering chronic illnesses, according to the director of health policy at a New York think tank.
Paul Howard, senior fellow at the Manhattan Institute, argues consumers are not being best served by the process, both in terms of cost and finding out information that might help them manage said cost.
“That system isn't sustainable or fair for patients with serious chronic illness,” Howard told Patient Daily. “We need to base pricing more on health outcomes and lower barriers to patients taking effective medicines. The natural place to start is with pay-for-performance contracts between drug makers and insurers that sharply lower co-pays for patients.”
Pharmaceutical companies have come under fire from all sides, including Congress, over the increase in the price of certain drugs -- with the EpiPen, an allergy medication, among the most prominent.
On the other hand, drug makers have tried to shift the focus to pharmacy benefit managers (PBMs), companies that negotiate prices for insurers and receive a percentage of the cost of the drugs.
Drug companies claim that because rebates negotiated are based on a percentage of the list price of a drug, PBMs have profited as the costs of specialty drugs increase.
“We also need transparency,” Howard said. “Cost calculators on insurance exchanges need to tell patients the costs they can expect to pay before they buy insurance, and if their insurer covers their medicines.”
The institute’s own communications manager told of difficulties he and his wife faced when accessing growth hormone drugs for their son.
Ben Boychuk, who edits the institute’s magazine, City Journal, told of the process' opaqueness, as well as the cost of drugs. Those problems became worse after the introduction of the Affordable Care Act, Boychuk wrote in an article published last year.
“Although the law capped out-of-pocket medical expenses, specialty drugs were exempt,” Boychuk said in a piece published in The Sacramento Bee. “But that only perverted an already distorted marketplace, encouraging insurers to raise consumer costs while narrowing their choices.”
He described trying to find out how much his family would have to pay for the drugs, and the hours spent talking to pharmaceutical companies and PBMs.
“I would compare it to playing the lottery without the thrill,” Boychuk said. “You never know what numbers will pop up, and your odds of winning are infinitesimally small.”
Boychuk went on to cite an analysis published by consulting firm Avalere Health. It revealed that the number of insurance plans charging co-insurance rates of 30 percent or greater for specialty medications has increased from 27 percent of popular mid-priced “silver” plans in 2014 to 41 percent in 2015.
“Co-insurance may make medication costs unpredictable,” according to the study. “Changes in cost-sharing requirements from year to year may surprise some medication-dependent patients.”
Boychuk said he and his wife were given wildly contradictory information on the list and rebate price of the sole drug they were allowed to use through their insurer. Their PBM first quoted a retail price of $7,262.90 for Humatrope, with an insurer-negotiated price of $3,465.44 for a 30-day supply. With a 30 percent co-insurance rate, that cost dropped to $1,039.64.
Another representative later told them the list price was $3,465.44 as the retail price, with a new negotiated price of $2,425.21.
“My wife followed up with another call 20 minutes later and received yet another answer from yet another rep,” Boychuk said.
Organizations in this story
Manhattan Institute for Policy Research 52 Vanderbilt Ave New York, NY - 10017