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- FDA Commissioner Dr. Scott Gottlieb put the pressure on health insurance companies and pharma middlemen about the high drug prices patients are facing at a health insurance conference on Wednesday.
- “Sick people aren’t supposed to be subsidizing the healthy,” Gottlieb said. “That’s exactly the opposite of what most people thought they were buying when they bought into the notion of having insurance.”
- Gottlieb’s interested in making the market for biosimilars — essentially generic versions of biologic drugs that could save the US billions — more competitive, something that has proven challenging so far.
FDA Commissioner Dr. Scott Gottlieb has health insurers in his crosshairs.
Speaking at a policy conference hosted by America’s Health Insurance Plans, the lobby that represents health insurers, Gottlieb called out the practices insurers and pharmaceutical middlemen use that keep prices high for patients.
The Food and Drug Administration, which Gottlieb oversees, is responsible for regulating food and drugs, as well as medical devices, blood donations, veterinary products, cosmetics, and tobacco. While he has oversight into whether or not a drug is approved, the agency does not play a role in determining how much the medication costs once it’s on the market.
Even so, he did not mince words when it came to pointing out the shortcomings of the way those prescriptions get paid for.
“The top three PBMs control more than two-thirds of the market; the top three wholesalers more than 80%; and the top five pharmacies more than 50%,” he said, referring to pharmacy benefits managers, which negotiate lower prices for brand-name medications. “Market concentration may prevent optimal competition. And so the saving may not always be passed along to employers or consumers.”
That’s putting pressure on patients when they show up at the pharmacy counter.
“We continue to see a backlash against these Kabuki drug-pricing constructs — constructs that obscure profit taking across the supply chain that drives up costs; that expose consumers to high out of pocket spending; and that actively discourage competition.”
That can lead to those with chronic conditions paying more for their medication, often close to the list price if they have a high deductible health plan that leaves them on the hook for paying a certain amount before insurance kicks in. And because the rebates drug companies pay to insurers and middlemen are still getting paid, that cost gets absorbed into lowering premiums for everyone who’s insured, healthy and sick alike.
“Sick people aren’t supposed to be subsidizing the healthy,” he said. “That’s exactly the opposite of what most people thought they were buying when the bought into the notion of having insurance.”
The insurers and the pharmaceutical middlemen need to own their role in the pressure it’s putting on patients, Gottlieb said.
“Now I understand that there’s a perverse incentive to use that rebated money to lower premium costs, since most health plans compete on the sticker cost of their premiums,” he said. “But we’re living in a world where financial toxicity is a real concern for patients. And every member of the drug supply chain needs to take responsibility for addressing it.”
Gottlieb’s bringing this responsibility up due to his interest in making the market for biosimilars — essentially generic versions of biologic drugs that could save the US billions — more competitive, something that has proven challenging so far.
Because of how rebates get paid out, there’s not a lot of incentive to use a cheaper version of the biologic drug, which keeps costs high.
“Everybody wins. The health plans get the big rebates. The PBMs get paid on these spreads. And branded sponsors hold onto market share,” he said. “Everyone that is, but the patients, who in the long run, don’t benefit from the full value of increased competition Congress intended.”
On Tuesday, the biggest health insurer in the US, UnitedHealthcare, said that starting in 2019, some of its members on high deductible plans would be eligible to get rebates for their medications. So, for example, if a patient went to the pharmacy for a medication that under their high deductible cost $600, that might get lowered to $300 after factoring in the rebate the insurer receives. Gottlieb called the move a “potentially disruptive step.”
“This could make the difference between patients affording their medicines and remaining adherent, or stopping effective therapy to save on out of pocket costs,” he said.
“Payors are going to have to decide what they want: The short-term profit goose that comes with the rebates, or in the long run, a system that functions better for patients, providers, and those who pay for care.”