Executive Summary
The path of a prescription drug from the manufacturer to the patient is a long and winding road with many stopping points along the way. The number of middlemen between the manufacturer and the ultimate consumer—the patient—complicates the pricing structure. Adding to the complexity is the extent of the rebates, discounts, and other forms of compensation that are provided between the various middlemen, particularly those provided after the final point of sale. These post-point-of-sale discounts are known in Medicare as direct and indirect remuneration (DIR).
The contracts and price negotiations that take place between the various members of the supply chain and the payment system—manufacturers, wholesalers, pharmacies, pharmacy benefit managers (PBMs– see sidebar), and insurers—all add to price distortions in the market. Determining the size of the benefit of those negotiations and to whom they accumulate can be difficult.
As policymakers seek to make health care more affordable, they should carefully consider the various potential impacts of any changes to the rules pertaining to the treatment of DIR. In particular, policymakers should consider the tradeoffs between passing such payments through at the point of sale to reduce patient cost-sharing—and the extent to which this is possible, since DIR by definition is not known at the point of sale—versus using such payments to provide across-the-board premium reductions.
Read more: https://www.americanactionforum.org/research/primer-prescription-drug-prices-discounts-fees-effects-part-d/#ixzz4wemTuqpr
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