Due to negotiations in the market, in 2020 the prices health plans paid for brand medicines fell 2.9%, on average.
But it often doesn’t feel that way for patients because insurers and pharmacy benefit managers have increasingly shifted more health care costs to patients through high deductibles and coinsurance.
In fact, half of commercially insured patient spending on brand medicines is based on the undiscounted list price of a medicine rather than the negotiated net price health plans receive. And commercially insured patients with a deductible have seen their out-of-pocket costs for brand medicines increase 50% since 2014.
Patient assistance programs offered by biopharmaceutical companies can provide a valuable source of support for many commercially insured patients to afford out-of-pocket costs associated with insurance coverage for their medicines. Health insurers and pharmacy benefit managers should not be allowed to limit how much assistance can help patients at the pharmacy.
Health plans, middlemen and other actors in the supply chain received more than half of total spending on brand medicines in 2020.
Payers (including insurers, pharmacy benefit managers and government programs) received more than $140 billion in spending on brand medicines in 2020. This spending reflects rebates, discounts and other payments from biopharmaceutical companies that lower the cost of medicines. However, savings in the system are often not shared with patients at the pharmacy counter.
Additionally, unprecedented growth of the 340B drug pricing program resulted in a 1,100% increase in the amount hospitals and other 340B entities received from the sale of brand medicines purchased through the 340B program between 2013 and 2020. During that same time period, over 94,600 contract pharmacy relationships were established, contributing to the growth in 340B pharmacy and provider margins on brand medicines.
Simply having health insurance coverage is not always enough for Americans to afford their care. More than 30% of Americans who have insurance still face a financial barrier to care, including trouble paying medical bills or other out-of-pocket costs.
In addition to high out-of-pocket costs, health plans use utilization management tools, like requiring prior authorization or failing first on other therapies, which can create significant barriers. Patients with some of the most serious chronic diseases – autoimmune diseases, allergies and diabetes – are more likely to report experiences with these health plan barriers than other Americans who take prescription medicines.
While health care providers like doctors and nurses are there for patients at pivotal moments, hospital administrators often take advantage of the system to pad their bottom lines at the expense of patients. In fact, hospitals are the largest share of health care spending in the United States and are a driver of higher cost sharing and premiums for patients across the country.
To fix our health care system, we need a robust discussion about the barriers patients face to accessing their medicines and the drivers of health care spending.
Patients need a holistic solution that looks at every part of the health care system. We are for delivering meaningful change that lowers costs for patients, while removing barriers to care and preserving choice and future innovation. It’s going to take work from all stakeholders – including insurers, hospitals, pharmacy benefit managers, biopharmaceutical companies and others – to deliver the change patients need.
America’s biopharmaceutical industry is not for the status quo and is bringing forward common-sense reforms. We are urging lawmakers to enact reforms that will ensure patients benefit from America’s engine of innovation and get the care they need. These reforms include making sure patients share in the savings our industry provides, capping what seniors pay out of pocket for medicines, addressing insurance practices that restrict access to care, and strengthening safety-net programs to ensure they deliver the support vulnerable patients need.