Trump ad­min­is­tra­tion en­cour­ages hopes that kick­backs will stop.

New ac­tion by the Trump ad­min­is­tra­tion en­cour­ages hope that kick­backs will be elim­i­nated

The Washington Times Daily - - FRONT PAGE - By Mar­ion Mass Mar­ion Mass is a Philadel­phia-area pe­di­a­tri­cian and the co­founder of Prac­tic­ing Physi­cians of Amer­ica,

Ac­cord­ing to re­cent polls, Amer­i­cans rank health care as their most im­por­tant pol­icy is­sue. Pres­i­dent Trump re­flected this con­cern in his State of the Union ad­dress, say­ing his “next ma­jor pri­or­ity” is “to lower the cost of health care and pre­scrip­tion drugs — and to pro­tect pa­tients with pre-ex­ist­ing con­di­tions.”

A new rule in­tro­duced last week by the Depart­ment of Health and Hu­man Ser­vices would strike at the root of ris­ing pre­scrip­tion drug costs that are dis­pro­por­tion­ately hurt­ing those with pre­ex­ist­ing con­di­tions.

The rule would elim­i­nate the hun­dreds of bil­lions of dol­lars of kick­backs, eu­phemisti­cally called re­bates, that pre­scrip­tion drug pur­chasers known as phar­macy ben­e­fit man­agers (PBM) de­mand from man­u­fac­tur­ers in re­turn for ac­cess to Medi­care and Med­i­caid in­sur­ance plans. (Sim­i­lar re­form to pri­vate plans re­quires con­gres­sional ac­tion.)

Cur­rently, the govern­ment pro­vides PBMs a “safe har­bor” from the Anti-Kick­back Statute in the Medi­care Pro­tec­tion Act. This has al­lowed PBMs to turn drug chan­nels into a pay-to-play ar­range­ment. By re­mov­ing the safe har­bor, the HHS rule will al­low rebate funds to di­rectly off­set the costs of pre­scrip­tion drugs. (A sim­i­lar safe har­bor ex­ists for group pur­chas­ing or­ga­ni­za­tions, which con­trol hospi­tal sup­ply pur­chases and have been blamed for per­sis­tent drug short­ages.)

To un­der­stand the im­pact PBMs have on pre­scrip­tion drug costs, con­sider the price of in­sulin. As a pe­di­a­tri­cian, I hear the strug­gles of my pa­tients and their fam­i­lies to pay for this vi­tal drug. At a Sen­ate Fi­nance Com­mit­tee hear­ing on drug prices that I at­tended last month, Kathy Sego of In­di­ana tes­ti­fied about how her son’s in­sulin cost her $1,700 a month, and her son ra­tioned his sup­ply. An­toinette Wor­sham of Ohio tes­ti­fied at a House hear­ing the same day about her daugh­ter’s tragic death due to this grow­ing trend of in­sulin ra­tioning.

In­deed, the list price of in­sulin — a drug that has been around for about a cen­tury — has risen by 500 per­cent over the last decade, caus­ing im­mea­sur­able suf­fer­ing for count­less Amer­i­can fam­i­lies. Yet, over that same time­frame, net in­sulin prices — af­ter sub­tract­ing man­u­fac­turer rebate pay­ments to PBMs — have stayed es­sen­tially flat, ac­cord­ing to mul­ti­ple analy­ses.

These bil­lion dol­lar kick­backs are re­spon­si­ble for the dis­crep­ancy be­tween sky­rock­et­ing list prices and flat net prices. Ac­cord­ing to a 2017 Berke­ley Re­search Group study, re­bates now make up about one-third of list prices. They have more than dou­bled over the last decade. To pay for them, man­u­fac­tur­ers in­crease list prices. In con­trast, ac­cord­ing to SSR Health, net prices ac­tu­ally de­clined by more than five per­cent in 2018, with nu­mer­ous drug­mak­ers dis­clos­ing this year that they’ve low­ered net prices. The HHS rule seeks to do away with this “Kabuki drug pric­ing” sys­tem.

PBM sup­port­ers such as House Speaker Nancy Pelosi ar­gue that kick­backs de­fray health care costs. It’s true that most re­bates are passed onto health in­sur­ers, which use them to lower av­er­age premium costs for in­sur­ance plans. While the healthy see their premium costs neg­li­gi­bly re­duced as a re­sult of this scheme, it comes at the ex­pense of the sick­est pa­tients with chronic dis­eases who have to pay higher pre­scrip­tion drug prices as a re­sult. PBMs ben­e­fit from this set up with rev­enues that can ex­ceed man­u­fac­tur­ers’.

Even if pa­tients have in­sur­ance cov­er­age, they must pay in­flated list prices be­fore they meet their de­ductibles, and then their sub­se­quent co­pays are a func­tion of these list prices. The pa­tients with pre-ex­ist­ing con­di­tions — such as diabetes, cancer, hy­per­ten­sion and pre­ma­ture birth, as well as those who are more prone to hos­pi­tal­iza­tion — are hurt the most by this sta­tus quo that amounts to a tax on the sick for the ben­e­fit of the healthy.

While this topic is cer­tainly wonky, there’s grow­ing recog­ni­tion — as ev­i­denced by the HHS pro­posal — that kick­backs are the cul­prit for ris­ing pre­scrip­tion drug costs. Sen, John Cornyn, Texas Repub­li­can, spoke for many when he asked at the Sen­ate hear­ing, “Can any­body on the panel ex­plain to me why we have a gen­eral pro­hi­bi­tion against kick­backs, call them ‘re­bates,’ un­der the So­cial Se­cu­rity Act, but we nev­er­the­less al­low it for pre­scrip­tion drug pric­ing?”

Across the aisle, Sen. Ron Wy­den, Ore­gon Demo­crat, said last week that he has com­plained “for years” that “mid­dle­men have no ac­count­abil­ity and con­sumers don’t see any sav­ings at the phar­macy counter.” This is a bi­par­ti­san ef­fort that Speaker Pelosi should em­brace.

Un­for­tu­nately, the pre­scrip­tion drug re­form fight has be­come pol­luted with out­side in­ter­est group money, so people dis­count opin­ions as bought and paid for. That’s why I urge pa­tients and my fel­low physi­cians to em­brace the bi­par­ti­san goal of re­duc­ing drug costs for all Amer­i­cans — es­pe­cially the sick­est among us — by sup­port­ing this HHS rule and fur­ther call­ing for a con­gres­sional re­peal of kick­backs for PBMs.

Even if pa­tients have in­sur­ance cov­er­age, they must pay in­flated list prices be­fore they meet their de­ductibles, and then their sub­se­quent co-pays are a func­tion of these list prices.

IL­LUS­TRA­TION BY HUNTER

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