Drug Costs

NYU Medical Professor: “Sick Patients Deserve the Rebates”

February 14, 2019 4:32 pm

The U.S. House Ways and Means Committee held a hearing Tuesday on drug pricing at which the subject of pharmacy benefit managers (PBMs) came up. We also raised the issue of PBMs that day and weren’t the only ones. Dr. Marc Siegel, a professor of medicine at NYU Langone Health, addressed PBMs and the benefits they and insurers receive from drug manufacturers in a Hill column the day after the House hearing.


Siegel endorsed the Trump administration’s plan to “end the practice of PBM rebates in the Medicare and Medicaid programs as of January 1, 2020.” He also said he supports two pieces of legislation passed in the 115th Congress, the Patient Right to Know Drug Prices Act and the Know the Lowest Price Act, which would have removed gag clauses that keep pharmacists from letting consumers know if their prescriptions would cost less if they paid out of pocket. Siegel also warned against policy prescriptions, like tethering prices paid in the United States to those paid in other countries, that would “decrease accessible options for my patients at a time of great advances in cancer immunotherapy treatments, surgical and radiological techniques.”


Siegel’s premise was simple: “sick patients deserve the rebates,” not insurers or PBMs.


We agree. As this blog noted last week, in 2018 drug manufacturers paid $166 billion in rebates and discounts, amounting to a 40 percent reduction in prices for off-brand drugs. U.S. Health and Human Services Secretary Alex Azar said the Trump administration rule, if implemented, would allow senior citizens – to the tune of $29 billion – to benefit from manufacturer rebates, not insurers and PBMs.  


As this website explains, PBMs also often don’t allow patients to use copay coupons, which are offered by drug manufacturers to patients to help defray the out-of-pocket cost of a drug. Instead, insurers and PBMs use copay accumulator programs, which “block copay coupons from being applied to deductibles and out-of-pocket maximums for some medicines” and “which over the course of the year leads to patients paying significantly more at the pharmacy.”


The inability to use these manufacturer-provided coupons is especially devastating because deductibles have risen 350 percent since 2006 and coinsurance costs have increased 89 percent.


Our Tuesday blog post argued consolidation in the PBM industry harms consumers. (In short, as Michael Carrier wrote in Health Affairs last August, “As PBMs have consolidated, prices have risen.”) That trend has worsened in the last eight years. In 2017, 70 percent of all prescription claims in the United States were processed by only three PBMs, up from about 50 percent in 2011.


The rule proposed by the Trump administration wouldn’t stop these mergers, but it would stop PBMs from pocketing savings that should go to patients – without stifling medical innovation or reducing patient access to treatments.

As Marc Siegel suggested, perhaps that’s just what the doctor ordered.