The convoluted, confusing, and opaque system for pricing drugs is distorting the market—and limiting access to drugs for the sickest patients. This is the general conclusion from the latest episode of the I am BIO Podcast, in which three experts explain how the system works (or doesn’t), and the consequences for patients.
“There is a lot of variability in the prices that patients will pay for drugs,” Anna Hyde, VP of Advocacy and Access for the Arthritis Foundation, says in the podcast.
As previously reported by Bio.News, a big part of the problem seems to be the system of pharmacy benefit managers (PBMs), which handle prescription medication coverage on behalf of health insurers. According to the Federal Trade Commission, the major PBMs are vertically linked with health insurance companies and specialty pharmacies, providing them financial incentives to drive customers to their connected services.
“It’s reverse insurance,” says Dan Durham, BIO’s Senior Health Policy Advisor. “So while the health plans may claim, ‘We’re using this to reduce everyone’s premium,’ the fact of the matter is, the sickest patients pay the list price.” As a result, many do not take the medication, which means increased health care problems and costs.
‘A way to discriminate against sick patients’
In 2020, stakeholders other than drug producers received more than half of overall spending on brand-name medicines—and a recent study indicated that hospitals mark up the price of cancer treatments by up to 630%.
“It’s possible that a hospital could earn more revenue per unit from a drug than the pharmaceutical manufacturer that developed the drug,” Dr. Vinay Rathi of Massachusetts Eye and Ear and Mass General Brigham and one of the authors of the study tells the podcast. Even with his “conservative approach,” the lowest medium markup was more than 100 percent higher than medicine purchase expenses.
It’s “a way to discriminate against sick patients,” concludes BIO’s Durham. The Affordable Care Act prohibited health plans from discriminating against pre-existing conditions, so now, “they look at high-cost prescriptions and discriminate on that basis.”