Commercially insured patients with deductibles and coinsurance pay more when manufacturers raise a drug’s list price and do not directly benefit from the confidential rebates paid by manufacturers to insurers, according to a study published this morning in JAMA Open Network.
The study was authored by clinicians affiliated with Brigham & Women’s Hospital and the Harvard School of Medicine. They examined how list and net prices changed for 79 brand name drugs that sold more than 1,000 units per quarter between 2015 and 2017. Although small in number, those drugs generated $67 billion in sales revenue in 2017, or nearly 15% of all expenditures on prescription drugs in the U.S.
The study examined whether price changes for brand-name drugs are correlated with changes in patient out-of-pocket spending and whether this association varies by insurance benefit design, including high-deductible insurance plans and plans with any amount of deductibles or coinsurance.
Out-of-pocket spending by patients rose 3.5% between 2015 and 2017, from $29 to $30. However, there were stark differences in what patients paid depending on their insurance coverage. Those with fixed co-payments for their prescriptions “were insulated from increases in list prices,” the study concluded. But those with any form of deductible saw their out-of-pocket costs increase a median of 17.5%. Those with any form of coinsurance payments saw their out-of-pocket costs increase a median of 15.8%.
The study noted that 84% of patients with private health insurance have a pharmacy benefit with at least three drug tiers, with coinsurance payments required for higher-tier drugs. Yet 25% of the drugs examined saw their net prices decrease between 2015 and 2017 due to rebates provided to PBMs and insurers.
The study’s authors said “policymakers should consider how to protect patients from large increases in out-of-pocket spending resulting from year-over-year increases in list prices for prescription drugs.” For instance, Congress could cap annual increases on list prices or levy monetary penalties against drug manufacturers for price increases above inflation by requiring mandatory Medicare Part D rebates. This is similar to the model already used for the Medicaid rebate and 340B programs.
They also recommended addressing the increasing gap between list and net prices “by eliminating confidential manufacturer rebates to insurers and pharmacy benefit managers or mandating that such rebates be passed directly to patients at the point of sale.”