Pinning all the blame on pharma for high drug prices is an oversimplification

SUMMARY: Via Consumer Reports “How much a consumer pays for meds is also driven in part by drug supply system middlemen whose wheeling and dealing with drugmakers contributes to rising drug costs, according to multiple government reports and industry experts. Shrinking insurance coverage is another part of the problem, with greater numbers of Americans paying a larger share or even the full price of their medication.

Although public anger over high drug prices often focuses on drugmakers, there’s a middleman who plays a role.

In other industries, that might be considered an illegal kickback. But in the early 1990s, the Department of Health and Human Services (HHS), authorized by Congress, wrote an exception for these rebate payments to federal anti-kickback laws. That allowed drug companies to use the payments as a negotiating tool, according to Stephen Schondelmeyer, Pharm.D., a professor of pharmacoeconomics at the University of Minnesota in Minneapolis.

Payments and other discounts to PBM’s doubled over five years, from an estimated $83 billion in 2013 to $166 billion in 2018, according to figures from Adam Fein, an industry consultant, and drug pricing expert at the Drug Channels Institute, a research firm.

 Humira, a rheumatoid arthritis drug from the pharmaceutical company AbbVie. Since 2014, the amount that the company must pay to PBMs increased sharply­—about 600 percent. That helped push Humira’s list price up 78 percent.

And that pesky insurance coverage

About a third to half of people in commercial plans are charged using a coinsurance percentage for certain drugs, Fein says. That compares with just 3 percent of people enrolled in these plans in 2004. Depending on the drug, a person could be on the hook for a hundred dollars or more per month.

To illustrate, consider Humira again. The list price for a month’s supply is now $5,174, compared with $2,914 in 2014, according to GoodRx, a company that tracks retail prices for prescription drugs. So people with 30 percent coinsurance would pay $1,552 every month out of pocket—$678 more than just a few years ago.

This is just another indication that our healthcare system is a mess. It’s too damn profitable and everyone wants a slice of the pie.