March 11, 2019
Dive
Brief:
- Spending on retail prescription
drugs rose by almost 27% between 2012 and 2016, and a bigger share of
health insurance premiums went toward pharmacy benefits, according to
a new Pew Charitable Trusts study looking
at various players along the drug supply chain.
- Pharmacy revenues more than
doubled from $30.8 billion to $76.9 billion during the period. Net
spending for retail prescription drug coverage also increased from $250.7
billion in 2012 to $314 billion in 2016.
- At the same time, drug
manufacturer rebates increased from almost $40 billion in 2012 to nearly
$90 billion in 2016. PBMs passed through 78% of rebates to
payers in 2012 and 91% in 2016. However, other revenue, including administrative
fees, skyrocketed, offsetting some of those savings.
Dive
Insight:
Pew’s
report shines a light on the complex pharmaceutical supply chain as
policymakers in both parties show more interest in rising prescription drug
prices, including the middleman PBMs that often negotiate prices for employers.
These across-the-board revenue increases at every step of the ladder all
eventually trickle down to patients in the form of higher out-of-pocket costs
and premiums.
Allan
Coukell, senior director of health programs at Pew, said the study is unlike
others because the researchers included "premiums allocated to the
pharmacy benefit — important because including them gives a more complete
picture of where a patient’s money goes."
New today, we release a “follow the $”
report on retail drug spending - who spends how much and who is keeping the
money after accounting for the complicated stakeholder financial transactions
in the pharmaceutical supply chain? (thread) https://www.pewtrusts.org/-/media/assets/2019/03/the_prescription_drug_landscape-explored.pdf …
CMS has said retail prescription drug spending
skyrocketed by almost 27% between 2012 and 2016 — faster than any other
healthcare expenditure category. New specialty drugs are blamed for some of the
cost increase. CMS believes retail prescription costs will continue to outpace
other healthcare spending growth through 2026.
Health officials and policymakers view this area as one
place to contain costs. However, unlike costs for procedures and services, the
flow of money involving pharmaceuticals isn’t as clear. One reason is that
there are multiple players in the chain, including drugmakers, wholesalers,
pharmacies, PBMs and payers.
In its report, Pew showed that rebates and discounts are
helping offset the rising cost of brand name drugs. Though rebates have
controlled costs, PBMs have increased fees, which have increased healthcare
spending.
Seven of the biggest drugmakers took fire from lawmakers
at recent Capitol Hill hearing, where
senators also warned PBMs to expect more scrutiny in the coming
months. Sen. Ron Wyden, D-Oregon, also asked company officials at the
recent hearing to produce written answers about whether they would lower list
prices if Congress eliminated rebates.
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