Middlemen don’t want patients to know how they are stacking the deck against them.
The prices health plans paid for brand medicines increased by an average of just 1.0% in 2021 due to negotiations in the market
It often doesn’t feel that way for patients because insurers and pharmacy benefit managers (PBMs) have increasingly shifted more out of pocket costs on medicines to many patients through high deductibles and coinsurance. So while health plans routinely base patient cost sharing for services like hospital stays and doctor visits on the negotiated prices the health plans pay, they receive with patients, when it comes to life saving medicines, that’s often not the case.
More than half of every dollar spent on a brand medicine goes to middlemen like insurance companies and PBMs, as well as hospitals and the government. And just three PBMs control 80% of the marketplace, which means they get to decide what medicines are covered and what patients have to pay. More often than not, these middlemen put their own profits before patients.
A proposed bureaucratic scheme won’t help
Unfortunately, right now legislators in Minnesota are considering bills (HF 17 and SF 168) that would create a so-called “prescription drug affordability board.” While the name might sound good, what it does is allow government bureaucrats to arbitrarily decide the value of medicines sold in Minnesota.
This legislation could have serious unintended negative consequences for Minnesotan patients and fail to deal with the entities that actually decide what patients pay for their medicines – the health insurance companies and middlemen like PBMs.
Plus, misguided government regulation of drug prices in Minnesota could create barriers to certain medicines, putting arbitrary restrictions between doctors and patients working together to decide which medicine is right for them.
The fact is that price controls can limit access to needed medicines. Research shows that “it is simply not true that government can impose significant price controls without damaging the chances for future cures.”
- A 50% decrease in the price of medicines would result in a 25% to 60% decrease in the number of new drugs in the pipeline, according to expert estimates.
- U.S. patients enjoy earlier and less restrictive access to new therapies, a finding that is reinforced by HHS’s own analysis of Medicare Part B drugs, which showed that only 11 of the 27 drugs examined (41%) were available in all 16 comparator countries, nearly all of which have policies that let the government set the price for medicines.
- Nearly 90% of new medicines were available within one year of launch in the United States, compared to just 52% in France, 45% in Canada and 61% in Germany – according to data capturing all 460 new medicines launched between 2012 and the end of 2021.
- In countries where governments set the price for medicines, such as the United Kingdom, it can take over a year from the time a drug is approved to the time it is available to patients. Some countries have a delay of over 3 years for a cancer drug to be available to patients.
Finally, there’s no evidence that any of the three established prescription drug affordability boards in other states have helped patients. Just ask Maryland: The state has spent millions of taxpayer dollars without lowering patient costs.
Minnesota legislators should make the right choice for patients
Patients need help with their out-of-pocket costs for prescription drugs and there are many policies that other states have passed or are considering to help ensure rebates reach patients at the pharmacy counter, and that patient assistance programs count towards patient deductibles. Policymakers looking for ways to lower costs for Minnesotans should be focusing on policies that help patients better afford their medicines at the pharmacy counter.
- One way to reign in PBMs and lower costs for patients is by requiring PBMs to make sure the out-of-pocket costs patients pay is based on the lower price the PBM pays. Recently, West Virginia became the first state to pass legislation of this kind to help patients save money at the pharmacy counter. Minnesota’s legislature could pass similar legislation to make a big difference for patients in the very near future.
- Policies such as making cost-sharing assistance count towards a patient’s out-of-pocket spending requirements, making monthly costs more predictable and requiring that coverage for some medicines starts from day one would also lower costs for patients without sacrificing access to medicines.
PhRMA and its member companies share the concern that many Minnesotans face challenges affording their medicines at the pharmacy. We want to work with the state’s legislature on solutions. HF17 and SF 168 won't achieve our shared goal of improving affordability and protecting Minnesotans’ access to the medicines they need.