With Rebates, Everyone Pays Except for Drug Companies

by Alicia Caramenico for AHIP

People should be able to afford the medications they need. Instead, many prescription drugs cost more than a mortgage.

The health insurance community is working toward solutions that increase competition from generics and biosimilars, and provide more insight into drug research, development, and pricing to ensure access to high-value treatments.

Photo courtesy of Joint Base Elmendorf-Richardson

One thing that won’t make pharmaceuticals more affordable: rebates. Experts agree that point-of sale rebates do nothing to address the fundamental issue of high drug prices. They also nothing to stop drug companies from increasing the drug prices to fill their pockets.

“The answer is lower the price of drugs as opposed to giving rebates back,” Stace Mass, head of government affairs at the American Pharmacists Association, said at a recent POLITICO Live event on the drug supply chain. Co-panelist and Johns Hopkins health policy professor Gerard Anderson pointed out that most rebates apply to specialty drugs, which won’t help the majority of people who take generics or lower-cost, brand-name drugs.

We see a similar problem with copay coupons, which also keep costs high for everyone. Big Pharma uses these coupons to keep people on higher-price drugs and removes any incentives for patients to use a less expensive generic medication. By steering patients toward more expensive, brand-name treatments, Big Pharma keeps costs high for everyone—and keeps their large profit margins, which are at least five times that of any other health care industry, including insurance providers.

As said by Angus Worthing, chairman of the American College of Rheumatology’s government affairs committee at the Politico Live event, “Coupons to help customers cover their medicine co-pays do nothing but enable drug companies to increase prices.”

The real problem is that drug prices are determined and controlled 100 percent by drug companies. And the true costs are locked in the “black box” of drug pricing.

While PhRMA yells about the drug supply chain, insurance providers and pharmacy benefit managers are working hard to negotiate lower prices for their members—and are very successful at delivering savings. We won’t be distracted by Big Pharma’s ad campaigns. We will keep working for lower prices for you.

This piece, With Rebates, Everyone Pays Except for Drug Companies, originally appeared on AHIP.org.