PBM and Insurer Funded Front Group Demands Bigger Rebates and Less Medical Innovation

  • by: Robert Goldberg |
  • 04/25/2016
If you’re interested in pocketing billions more in drug price rebates what do you do?  Fund a front group that claims to make prescription drug prices affordable and propose policies that would give a cartel of PBMs, health plans and unions control over the development, pricing and access of new medicines.   Call for transparency but then refuse to share how those rebates are generated and distributed and how they fatten your profit margins. 

The Coalition for Sustainable Drug Pricing -- an offshoot of the National Healthcare Coalition -- will once again propose 'market-based' solutions to reduce drug prices.   These proposals are actually slightly reworked versions of proposals made by the Center for American Progress, as well as Bernie Sanders.  

The Coalition is once again waving the red herring of speciality drug costs.  It's expert panel is silent about all the rebates being pocketed by their institutions.  

The Coalition is actually a front group for health plans, PBMs and the Washington offices of many liberal interest groups who are all interested in reducing pharmaceutical and biotech profits.  The proposals would do that by transferring even bigger rebates to the aforementioned insurers and PBMs and giving these groups more control over access to new medicines, which in turn would increase their short term profit margins. 

Here's what the Coalition is calling for today:

•    It would force drug companies to a minimum percentage of their revenue in R&D. Companies failing to do so would be subject to fines and possible federal prosecution
•    A price that exceeds a price set by federal advisory committee by more than 20 percent would be presumed to be unreasonable and to harm public health.  Under current law, designating something or someone a public health threat the government has the power to immediately seize products, patents, set prices and throw people in prison for price gouging, just like in Venezuela. 
•    It would allow government health plans, private insurers, hospitals, union health programs and prescription drug benefit companies like CVS to form a cartel set ‘fair’ prices and decide which patients get what medicines based on how much the ‘private’ panel decided how much our lives are worth and how much more should be spent on drugs each year. Drug companies that fail to comply with the prices would be prohibited from sell all of it’s products to any government program. 
•    It allows the same cartel to keep $100 billion in rebates that are supposed to go to patients but instead are pocketed by these special interests

It also wants to weaken and eliminate FDA regulations established to protect patients against serious and life threatening adverse events from the use of new medicines.  

The Coalition also claims that their policies will actually increase innovation by forcing companies to only invest in truly innovative drugs.  Instead is asserts that R and D is an essential expense for a drug company, not an optional investment, if at some point it doesn’t invest in research and development, it won’t be a drug company anymore.

That’s like saying health insurers will have to stay in business even if they can’t raise premiums because otherwise it wouldn't be a health plan anymore.   Ask United Healthcare how that business model would work.  

Nobody's going to offer health insurance if they'll lose money selling it. The same goes for life saving medicines.  

There are better ways to make medicines more valuable by making them more affordable.  The first is to use rebate money to reduce out of pocket cost sharing of actual patients.

The second is to cut the time, cost and risk of bringing new medicines to market.  We can do that by building on proposals included in the 21st Cures Act and on efforts developed by the FDA and groups such as Friends of Cancer Research.   Bringing more medicines to patients more quickly at lower cost will increase competition and encourage innovators to shift investment into more discovery.  

We should all be on the same side in fighting against disease.    Stoking populist anger in order to fatten short term profits doesn't advance that alliance.  

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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