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The Real Problem Behind High-Price Drugs Starts At The Beginning

posted by Matt Eyles, President & CEO, AHIP

on March 27, 2018

It is a fact that brand name prescription drugs are becoming more expensive every day. Who is on your side? Health insurance providers and pharmacy benefit managers (PBMs) are fighting for consumers like you, negotiating lower prices with pharmaceutical companies on your behalf. We work to drive down prices across the full spectrum of drugs and medical services you need to maintain or improve your health. The savings we negotiate mean lower premiums and lower out-of-pocket costs for you.

If pharmaceutical companies were left unchecked without health insurance providers or PBMs to intervene, does anyone truly believe that drug prices today would be lower?

More and more, consumers are finding out just how high the prices are for their medications—and they’re not happy. So, it’s no surprise Big Pharma, the one and only player who sets those prices, is trying to cast blame elsewhere. This is a deliberate tactic to obscure the lack of competition, transparency, and accountability in prescription drug prices.

By the time you pick up a prescription at your pharmacy, your health insurance provider (and its PBM partner) have already negotiated with pharmaceutical makers and others to bring down your prescription price.

If you have the misfortune of picking up a prescription without insurance, you’ll often pay the highest prices possible, especially for brand name drugs. That’s typically the full list price set by the drug company plus a markup. For some serious illnesses, like cancer, those high list prices can total hundreds of thousands of dollars.

Here’s the point:

The original list price of a drug drives the entire pricing process, and that price is determined and controlled 100 percent by the drug company. We commend new HHS Secretary Azar who publicly acknowledged during recent hearings that the U.S. has a problem with list prices that continue to grow ever higher.

When those prices go up, it ultimately causes your premiums and out of pocket costs go up. By contrast, when competition increases because new generic drugs are approved, drug prices tend to go the other way—that is, DOWN. This is why Big Pharma is the only stakeholder group to oppose enacting bipartisan legislation—the CREATES Act—that would end the gaming of the system by trying to limit access to adequate samples of branded products so generic companies cannot do the testing required to bring new lower-priced generics to market.

Do you want lower premiums and out-of-pocket costs for yourself and your family? Everyone does. Health insurance providers and PBMs negotiate lower prices for prescription drugs, so they can lower your premiums and out-of-pocket costs. Big Pharma doesn’t want you to know that—and is doing everything it can to undermine the one group that’s pushing back on their high drug prices.

Don’t get distracted. This problem starts at the beginning. The problem is the price.