Readers Write: Drug companies do what for-profit firms do

As a practicing retail pharmacist for over 50 years, I remember when a customer walked into the pharmacy, handed you  a written prescription, the pharmacist filled it, answered any questions the customer might have had or imparted information he or she felt was important for the patient to know, the customer paid and left the pharmacy.

Those days are gone as are so many of the “mom and pop” stores that dispensed medications and helped so many people, many new arrivals in our country, to the proper place for their medical care.

 There was a book called the” red book” that had very accurate costs of all prescription drugs and was relied on by the retail pharmacist for his basis for costs when he filled a prescription.

Today, there are so many people who are standing between customers and the pharmacist. There are insurance providers, pharmacy benefit managers, health insurance plans, wholesalers, third party companies that purchase drugs and treatments on behalf of employer health plans.

All of the above, rebates, and discounts, which means drugs always cost well far below their list prices. Yoni Blumberg wires that Americans spend about $1,200 on prescription drugs according to the latest figures from the Organization of Economic Cooperation and Development That is more than people pay in any other developed country in the world.

Congress passed an anti-gag clause bill, letting pharmacists give more information to patients to help them save on costs. Often, when you ask a pharmacist how much a prescription is without insurance, it is much less many times. It is up to the customer to raise this conversation which until now, was not allowed. 

Writing in “Healthcare Finance News,” Susan  Morse, a senior editor at “Healthcare Finance News,” says  ”There’s a whole lot of finger-pointing among providers, payers, PBMs, Big pharma,” about who is really responsible for the high drug prices we pay in America.

Adam Fein, a highly respected and leading management educator for and about the pharmaceutical industry and one of the country’s foremost experts on pharmaceutical economics and drug distribution, argues that sale prices for brand name drugs increased only1.5 percent in 2017.

A review of 2018  by four large PBMs written by  Mr. Fein showed that drug spending by those PBMs grew by 2 percent last year.

“Once again we find that drug spending is not skyrocketing–contrary to what you often hear from journalists and politicians.” Fein wrote in his  ”Drug Channels report”, emphasizes the net price paid after rebates rather than list prices.

America’s Health Insurance Plans responded to Mr. Fein’s opinion piece in the Wall Street Journal sayings, Big Pharma wants to shift the blame to health insurance providers who fight for consumers every day using their bargaining power to negotiate lower prices, saying the money or savings they negotiate are returned directly to consumers through lower premiums and out of pocket costs.

Here is how our current system works.

It starts with a structure that looks healthy on the surface. Health plans pay their PBMs based on the extent of the discount that a PBM can negotiate with individual drug companies.

In theory, this should encourage the PBM to drive prices down. After all, entities should bargain hard when their pay is tied to how much of a discount they can negotiate.

The problem? Drug companies raised their prices so they could give a greater discount. This increases how much of a “discount” the PBM can claim to have negotiated, and the payout to the PBM. It is a little like a department store raising prices right before a sale so the sale discount looks more appealing.

All of this might not be so bad if no one paid the high list price. But many people do. Many plans make patients pay full drug costs until they meet their deductible, and other plans require coinsurance — both of which are based on the list price. Many people still do not have coverage for prescription drugs, even if they have health insurance.

Thus, people are forced to pay the full price at various times. Worse yet, the entire structure encourages drug companies to compete not by cutting prices but by offering higher prices.”

Robin Feldman, author of “ The Cancer Curse: Regulatory Failure by Success:” ask the question,

What caused the increases?

Feldman writes, “At the end of the day, drug companies are able to use financial incentives to ensure that as lower-priced alternatives enter the market, they cannot gain much of a foothold. The companies have simply found a way to operate within the system to their own greatest advantage. Can one really expect anything different from profit-making enterprises?”

Feldman continues “The pharmaceutical industry has introduced extraordinary health-care advances. One cannot overemphasize the major life improvements over the past century that flow from innovation in prescription medications, including new lifesaving antibiotics, treatments for pain, psychopharmacological treatments and cancer drugs”.

As they say ‘’You pays yer money and takes yer cherce’’.

Who do you believe or who do you believe more

About the author

The Island Now

Share this Article