ICYMI in WSJ: Same Drug, Two Prices: Why the Higher Price Prevails

“Patients are paying hundreds of dollars more for a prescription than they would if their health plan chose to cover a lower-priced twin,” according to a recent investigation by the Wall Street Journal.

This eye-opening report is more evidence of the schemes insurance companies and their pharmacy benefit managers (PBMs) use that drive up the cost of life saving medicines for patients.

The problem facing patients. Experts have noted that PBMs may have a financial incentive to favor higher priced medicines over lower-cost alternatives, regardless of the impact those decisions have on patients. From the article:

“The way medicines are paid for in the U.S. has become so convoluted that some drugmakers are setting two prices for the same drug—and many health plans are choosing to cover the more expensive version. The decisions mean some patients are paying hundreds of dollars more in out-of-pocket charges to fill a prescription for an identical medicine made by the same company.”

What’s driving the problem? PBMs have gamed the health care system to generate more profits at the expense of patients.

• PBMs negotiate significant rebates that can lower what they and health plans pay for medicines by 50% or more, but they routinely make patients pay the full price for their medicines. This means patients can end up paying a lot more for their medicine than their PBM or insurer paid.
  
  
• PBMs make money through fees that are predominantly tied to the list price of a medicine. That means the higher the price of a medicine, the more money the PBM can make. As a result, PBMs may deny or limit coverage for lower-priced versions of medicines because of their misaligned incentives.

What does this mean for patients? The WSJ details the story of someone with Type-1 diabetes who was paying $630 out of pocket for a 100-day supply of insulin. He went around his insurance coverage and switched to an authorized generic version of the same insulin. He now pays $105 for a 125-day supply.

What good is insurance if you’re better off not using it in the first place?  

How can PBMs defend this practice? A spokesperson for one PBM said, “We make decisions on what is the lowest net cost to a plan sponsor.” 

Translation: PBMs do what’s best for insurance plans, not what’s best for patients. 

Unfortunately, this isn’t the only scheme these powerful middlemen use to game the system. PBMs also:

• Charge exorbitant fees tied to the list price of medicines.
• Deny patients the full benefit of their copay assistance.
• Get between patients and their doctors.
• Steer patients to pharmacies they own to make more money.

Fortunately, momentum is building on Capitol Hill to rein in PBMs. There are a few simple steps lawmakers can take today that would provide patients immediate relief, like making sure savings are shared directly with patients at the pharmacy counter and breaking the link between the fees PBMs charge and the price of medicines. 

The media and others continue to expose the many ways middlemen make it harder for people to access and afford lifesaving medicines. It’s time Congress stood up for patients — not PBMs — and demanded better.