Ask About Adherence: OIG proposed rule to reform the rebate system could improve adherence

Ask About Adherence is a blog series featuring Q&A’s with experts and new medication adherence resources. In this post, we are pleased to share a blog post from Leah L. Zullig, PhD.

Conversations and healthy debate about issues facing our industry and the health care system are critical to addressing some of today’s challenges and opportunities. The Catalyst welcomes guest contributors, including patients, stakeholders, innovators and others, to share their perspectives and points of view. Views represented here may not be those of PhRMA, though they are no less key to a healthy dialogue on issues in health care today.

In a new paper in AJMC, we anticipate that if the Department of Health & Human Services (HHS) Office of Inspector General (OIG) rebate rule is finalized and savings are passed on to patients at the point of sale, potential improvements in cost-related nonadherence could result. But this opportunity to reduce instances of costly hospitalizations and other medical care does not always exist in our current system.

Today, rebates are kept by pharmacy benefit managers (PBMs) and insurers, who claim to use these savings to lower premiums for all enrollees, rather than reduce high out-of-pocket costs for the patients whose prescriptions generate the rebates. This creates a system of “reverse insurance” in which rebate incentives may lower premiums for all patients in the insurance pool, but  patients with chronic diseases who purchase the medicines that carry negotiated rebates are left to pay based on list price. This reverse insurance creates a dynamic in which the sick, particularly those with comorbid chronic conditions, subsidize the healthy. To make rebates beneficial to individual patients, the value of rebates needs to be transparent at the point of sale. The proposed rebate rule would help fix this.

For example, Mr. Doe, a man with type 2 insulin-dependent diabetes and hypertension enrolled in a high-deductible plan, might face a list price for insulin of $500. If Mr. Doe has not yet hit his annual deductible, he must pay the full $500 list price, even though his health plan may be receiving a rebate of 60 percent. Under the rebate rule, Mr. Doe’s out-of-pocket costs would be related to the discounted price his insurer gets, not the list price. That means his medicine  would cost him $200 in the deductible, a difference of $300.

Using rebate savings to lower patient out-of-pocket costs has benefits for Mr. Doe and for the health care system at large. As a result of the change in out-of-pocket expenses, he may be more likely to adhere to his prescriptions, which in turn may lead to fewer costly acute health care events like hospitalizations and other medical care. By sharing rebates and discounts with patients, we can reduce poor health outcomes and health care costs.

Leah L. Zullig, PhD, MPH is a health services researcher, implementation scientist and Associate Professor in the Duke Department of Population Health Sciences. Dr. Zullig’s overarching research interests address the reduction of healthcare disparities, improving cancer care delivery and quality, and promoting cancer survivorship and chronic disease self-management.