A Call for A Consensus: Price Increases in Branded Drugs Are Unsustainable
By now, we’ve all heard the stories: Someone shows up at the pharmacy counter to pick up a prescription – it could be a new therapy, or one they’ve been taking for years – and is handed a bill for payment that’s much bigger than they expect.
Maybe it’s more than they can afford, so they head home without a necessary medication. Or perhaps they pay for it, but are forced to make other tough budget tradeoffs. Either way, they’re angry and confused.
The system isn’t working as it should.
Prescription drug prices keep rising – the average price of brand medications rose 232 percent from 2008 through 2017, according to our research. At the same time, more benefit providers are offering high-deductible and consumer-driven health plans. And some patients are getting stuck in the middle.
The scenario described above doesn't happen often, but at Express Scripts we believe it shouldn't happen at all.
A common-sense combination of legislative, regulatory and business actions can fix what’s broken and achieve what we all want: a system that provides the best care, at the highest value and lower cost. By working together, policymakers, pharmaceutical companies, PBMs and our clients can be champions for better.
GETTING REAL ON REBATES
PBMs exist to help employers and other health benefit payers control the cost of prescription drugs, while ensuring members get the access and care they need. Given the complexity of the pharmaceutical supply chain – with thousands of available medications, and hundreds of manufacturers – if PBMs didn’t exist, payers would invent one to help them navigate the system.
Express Scripts has 3,000 clients, with more than 80 million members covered by our PBM. We leverage their combined will and buying power to negotiate for lower drug prices. This typically happens through a rebate provided by a pharma company, creating a gap between the list price of drugs and the negotiated net price (after rebate) that our clients pay.
As pharma companies raise their prices, we negotiate harder on behalf of our clients for larger rebates to offset the cost. As a result, the gap between list and net prices has grown, as shown in the graph below.
Express Scripts passes back approximately 95% of all pharmaceutical purchase discounts, price reductions and rebates to our PBM commercial and health plan clients, and their members. In the federal government’s Medicare Part D program, 100% of the rebates are passed through to help lower premiums and reduce costs for both members (known in government programs as beneficiaries) and the government.
The result has helped our clients achieve a record-low drug trend of 1.1% for the first half of 2018. We are able to keep prices stable, even in some cases where utilization increased. Many of our clients use rebate savings to reduce the overall cost of healthcare benefits for all of their employees, rather than applying them only to savings for people who use prescription drugs at the time of purchase. It’s their choice.
The scenario described above – in which a patient is on the hook for a big prescription-drug bill – happens when they are in the deductible phase of their benefit, exposed to the full list price of the drug. Or it may occur in a consumer-driven health plan with a copay that’s based on a percentage of the full list price. There are an increasing number of these types of plans being offered.
A simple solution would be for pharmaceutical companies to lower their list prices, rather than offering rebates. It’s an approach we endorse.
But we know that in healthcare, nothing is that simple.
WE NEED A CONSENSUS POLICY APPROACH
Policymakers, from state legislators to the president and Congress, are focused on drug pricing – driven, in part, by complaints from constituents who cannot afford their medication.
The Trump Administration, through actions at the Food and Drug Administration and a proposed blueprint for change from the Department of Health and Human Services, has done a lot to advance prescription drug affordability. They recognize the need to not just expand healthcare coverage and access, but to address the root causes of medications with price points that exceed their value.
Express Scripts has weighed in with comments in support of the approach, and suggested actions to take it even farther. We propose a series of legislative and regulatory changes that would not only address the disparity between list and net drug prices, but that also would open up government programs to proven innovations that help our commercial clients do more for better patient care and lower cost.
For example, our SafeGuardRx® programs saved clients $32 billion last year, while helping patients get healthier by taking their medications as directed and benefitting from specialized pharmacy care. These solutions attack some of the most costly medical conditions, including diabetes, cancer and inflammatory conditions, by taking a holistic approach to increasing care and lower cost. They include value-based components and risk sharing – such as indication-based pricing and pharma company guarantees for patients who don’t respond to therapy – which are blocked by regulations from being used in Medicare and Medicaid plans.
The right approach to policy reform will require a consensus, in which every party gives something and no one gets everything they want. That’s true leadership.
If we can work together, across government, the pharma industry, and PBMs, for common-sense legislative and regulatory changes, we can achieve the goal we all share: manageable costs that lead to a healthier population. We truly can be champions for better.