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AHIP Hearing Statement Explains Role Of Health Insurance Providers In Drug Supply Chain

posted by AHIP

on May 9, 2019

On May 9, 2019, AHIP submitted a statement for a House Energy and Commerce Committee hearing on “Lowering Prescription Drug Prices: Deconstructing the Drug Supply Chain.”

Our statement points out that that the original list price of a drug is solely determined and controlled by the drug company—not the market—and it drives the entire pricing process. And if the original list price is high, the final cost that a consumer pays will be high. If manufacturers took steps that are fully within their control to lower drug prices, consumers would pay less. It is that simple: the problem is the price.

We also explain that in many cases health insurance providers have leverage to negotiate with drug makers to provide savings for all consumers. This is especially true where competition exists among prescription drugs (either from similar therapeutic alternatives or from generic or emerging biosimilar products).

We emphasize that all consumers benefit when health insurance providers negotiate lower prices. The savings from discounts and rebates are passed on through improvements to benefit packages, reductions in premiums, and/or lower out-of-pocket costs. This represents a broad and direct benefit for millions of consumers whether they get their coverage through Medicare, on their own, or through their employer.