Moreover, rebates cost biopharma about $40 billion each year. Nearly 90 percent of that $40 billion ($36 billion) is passed on to health plans by PBMs. In 2014, health insurers generated $663 billion in revenue, which means drug rebates are about 5 percent of total revenues.
I now see another layer to the strategy of make drug prices, which are effectively set by PBMs and insurers with higher coinsurance, the issue and blaming drug companies. It's all about making money coming and going. PBMs and insurers can extract deeper discounts from companies whose products they carry AND get the innovator firms to pay for the chunk that consumers have to cover:
Adam discussed an IMS study " Emergence and Impact of Pharmacy Deductibles: Implications for Patients in Commercial Health Plans" As he notes: "The report’s overarching theme is unsurprising: Higher out-of-pocket costs reduce patients’ adherence to drug therapy and increase prescription abandonment rates.
The report’s major contribution, however, links the growth in pharmacy deductibles to manufacturers’ copayment offset programs, which cover a beneficiary’s out-of-pocket costs for a brand-name drug. High deductible plans are shifting costs from payers to consumers and—in many cases—back to manufacturers.
The findings echo what payers have been doing by adding coinsurance rates to higher-tier products, per Employers Get Tougher About Pharmacy Benefits and Specialty Drug Management. Most people can’t afford to pay hundreds or thousands of dollars every month. Payers are therefore essentially daring pharmaceutical manufacturers not to pick up the patient’s coinsurance with a copayment offset program. This is the same dynamic that links the growth in four-tier benefit plans with copay offset program. See How the Fourth Tier Coinsurance Boom Drives Copay Offset Programs.
I’m not sure how many manufacturers have analyzed the codependent relationship between benefit design and their consumer-directed programs. This report suggests that such analysis would be truly therapeutic."
To which I would add.. maybe the innovators should show consumers how their drugs are priced by insurers to force them to cover the difference and suggest how patient hostile such an approach is. This co-dependency undermines the doctor patient relationship and moves medicine away from the kind of personalized treatment selection medical innovation is making possible.