Nearly every day, we’re bombarded by alarming headlines regarding the rising costs of vital and, often, life-saving medicines. To the average patient, there seems to be no rhyme or reason regarding why one medicine costs more than another. Sure, most people know that generics cost less than newer, brand-name medications. But even when there isn’t a generic or biosimilar, a drug’s price can seem variable when a patient is suddenly paying a higher co-pay when picking up a refill at the pharmacy counter.
[See: 10 Seemingly Innocent Symptoms You Shouldn’t Ignore.]
As patients and their physicians battle to secure access to medicines that are clinically warranted, a messy, long-term pricing war is happening behind enemy lines between insurance companies (and their contracted pharmacy benefit managers), who want to control drug costs across their customer base, and pharmaceutical/biotech manufacturers, whose innovation produced new treatments that they want to offer to target patient populations.
Explaining Drug Pricing Tug of War
Insurance companies (payers) try to reduce medication costs by creating tiered formularies. Part of the process to determine which drugs are preferred (read: cheap and easy to access without additional paperwork) is based on their relationship with a pharmacy benefits manager (PBM, such as Express Scripts or CVS Caremark) who directly negotiates with a pharmaceutical company or biotech to “wholesale” purchase medications. Of course, PBMs and insurance companies are out to negotiate the lowest price, but some drugs are expensive no matter what. (Whether cos- saving secured by PBMs and payers are passed down to patients in the form of lower co-pays or deductibles is highly questionable.)
Some of the most expensive drugs, such as biologics, are prescribed to chronic disease patients. In some cases, the drugs are always outside the preferred medication tier and will require a hefty co-pay by patients that may or may not be affordable. Other times, patients may find that the cost of their treatment has gone up if their prescription coverage changed (with or without warning). This is a huge problem for chronic disease patients who are particularly vulnerable to a change in health status if their medicine is delayed or unavailable as they determine their ability to afford it.
[See: Behind the Window: What Pharmacists Do.]
In response to tiered formularies, manufacturers developed patient assistance programs, the most familiar being the co-pay card. Once a patient enrolls in a manufacturer’s program, they use the co-pay card at the pharmacy in combination with insurance coverage. Expensive medications become much more affordable (to the patient’s wallet), sometimes just a few dollars per prescription. That’s good news, and studies show that patient assistance programs result in better adherence and health outcomes, yet they also drive up health care costs overall because insurance companies build “rebate” programs into their coverage calculations. How? Payers argue that co-pay cards reduce the incentive for clinicians and patients to respect plan formularies and speed members out-of-pocket maximum amounts, thereby increasing expenditures. They also push patients to branded, more expensive medications, when a generic might lead to a clinically equivalent outcome.
[See: 11 Things Seniors Should Look for in a Health Provider.]
Time to Call a Truce
According to a new white paper written by the University of Michigan Center for Value-Based Insurance Design and funded by Global Healthy Living Foundation, payers and manufacturers ought to come together in a “truce” to enhance access to clinically indicated prescribed medications while decreasing the financial and logistical burden on patients/families and their health care team. A nuanced, collaborative approach to evaluate each person’s health status combined with verifiable financial need would serve patients better than a one-size-fits-all program. The white paper suggested a few approaches regarding how insurance companies and pharmaceutical companies might work together better. Time will tell if deeply embedded business practices can adapt for the good of patient populations. Approaches include:
— Insurance companies would accept the use of patient assistance programs when a specific medication is clinically indicated and has low potential for inappropriate use, forgoing administrative hurdles meant to control costs and slow access (e.g., step therapy, prior authorization, formulary exclusions).
— Manufacturers would ensure information on clinical appropriateness — including scenarios where a medication is not clinically appropriate — is well-communicated in patient assistance materials.
— If the government updated its guidance, it would allow patient assistance programs run by charities the option to prioritize assistance based on clinical need — not simply the timing of the application for assistance. To read the white paper, click here. Once you’ve gotten your head around the absurdity of this backwards system, consider getting more involved to amplify the voice of the patients.
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It’s Time to Call a Cease-Fire on Drug Pricing originally appeared on usnews.com
