In order to put this in perspective, it is important to read the quote closely and to have an understanding of the utilization of prescription drugs in America
Before we dive into the numbers, readers should know the reference here is a poll from the KFF health tracking poll from February of 2019. This means the data is self reported. In my opinion, no one enjoys paying for prescriptions. So, it is hard to say what it means to “struggle to pay.” Are patients trading off paying for drugs because they need to pay the heating bill? Or are they simply choosing to de-prioritize healthcare?
With regard to the numbers, at first glance you think that 25% of Americans fall in this category. But the quote is “Americans who need prescription drugs”. We looked at a group of about 10,000 lives to see how many were using prescription drugs. Within this group, about 50% used a prescription drug during 2021. If we use this as a representative sample that means really, 1 in 8 Americans “struggle.” In the same sample group we then looked at people on maintenance drugs and found that about 35% are using a chronic medication. Again if we consider our 10,000 lives as a representative sample, that means about 1 in 11 Americans “struggle” to afford chronic medications.
The point is the last two administrations have had to spin the numbers to try and get people to agree that drug prices are a problem. They want to use this hyped story to gain political capital and tell constituents that they will do something about the rising price of prescription drugs and reign in the pharmaceutical industry and those middlemen, the pharmacy benefit managers. However, over the past two administrations they have done nothing.
The article talks about efforts to cap out of pocket cost, negotiating with manufacturers and collecting rebates. All of these things are happening today. So, the proposed government intervention is unlikely to have a meaningful impact.
What can happen is breaking down the vertically integrated system that misaligns the incentive in delivering health care. Insurers and the PBM they own do not only administer health care benefits, they fill prescriptions. They do this in conjunction with the manufacturers who make and supply the medications to their pharmacies. As long as insurers and PBMs make money on the distribution of medications and are allowed to set up complex, blinded purchasing arrangements with the manufactures, the payor and patients will overpay. Over 85% of the market today uses one of these vertically integrated health care companies. Nothing is going to change as long as these companies dominate the market.
There are ways to break this cycle. Hiring a transparent, pass-through PBM partner will allow the payor to see the true cost of medications and build benefits that favor the patient, not the administrator. Payors should hire administrators who pay claims and manage utilization. This process should be separate and transparent from the delivery system.
In a recent article in the Bristol Herald Courier, David Balto gives a great summary of the problems with the pharmacy benefit management industry, such
The Real Issues With Prescription Drug Costs
“Today, one in four Americans who need prescription drugs struggle to afford them — one in four,” president Joe Biden.
The last two administrations have used this misleading quote. See the Trump administration using the same data here: https://www.hhrjournal.org/2018/02/malaysia-can-teach-trump-how-to-lower-drug-prices/.
In order to put this in perspective, it is important to read the quote closely and to have an understanding of the utilization of prescription drugs in America
Before we dive into the numbers, readers should know the reference here is a poll from the KFF health tracking poll from February of 2019. This means the data is self reported. In my opinion, no one enjoys paying for prescriptions. So, it is hard to say what it means to “struggle to pay.” Are patients trading off paying for drugs because they need to pay the heating bill? Or are they simply choosing to de-prioritize healthcare?
With regard to the numbers, at first glance you think that 25% of Americans fall in this category. But the quote is “Americans who need prescription drugs”. We looked at a group of about 10,000 lives to see how many were using prescription drugs. Within this group, about 50% used a prescription drug during 2021. If we use this as a representative sample that means really, 1 in 8 Americans “struggle.” In the same sample group we then looked at people on maintenance drugs and found that about 35% are using a chronic medication. Again if we consider our 10,000 lives as a representative sample, that means about 1 in 11 Americans “struggle” to afford chronic medications.
The point is the last two administrations have had to spin the numbers to try and get people to agree that drug prices are a problem. They want to use this hyped story to gain political capital and tell constituents that they will do something about the rising price of prescription drugs and reign in the pharmaceutical industry and those middlemen, the pharmacy benefit managers. However, over the past two administrations they have done nothing.
The article talks about efforts to cap out of pocket cost, negotiating with manufacturers and collecting rebates. All of these things are happening today. So, the proposed government intervention is unlikely to have a meaningful impact.
What can happen is breaking down the vertically integrated system that misaligns the incentive in delivering health care. Insurers and the PBM they own do not only administer health care benefits, they fill prescriptions. They do this in conjunction with the manufacturers who make and supply the medications to their pharmacies. As long as insurers and PBMs make money on the distribution of medications and are allowed to set up complex, blinded purchasing arrangements with the manufactures, the payor and patients will overpay. Over 85% of the market today uses one of these vertically integrated health care companies. Nothing is going to change as long as these companies dominate the market.
There are ways to break this cycle. Hiring a transparent, pass-through PBM partner will allow the payor to see the true cost of medications and build benefits that favor the patient, not the administrator. Payors should hire administrators who pay claims and manage utilization. This process should be separate and transparent from the delivery system.
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