Prescription Drug Rebates On The Rise

Trump administration to eliminate safe harbors for drug rebates to PBMs |  Fierce HealthcareSource: Axios, by Tina Reed

Prescription drug rebates from drugmakers to commercial health plans are steadily increasing, a study published in JAMA Health Forum shows.

Why it matters: This is all part of a system in which drugmakers negotiate to get their product on the formularies of middlemen known as pharmacy benefit managers and health plans.

  • * “While drug rebates can reduce plans’ net costs, rebates do not reduce patients’ cost sharing,” the authors write.

This can ultimately “incentivize drug manufacturers to inflate list prices and PBMs to distort drug formularies to favor high list price and high-rebate therapies,” the authors write.

What they’re saying: This is also an equity issue, particularly for patients buying individual plans.

  • * “We have the sick people paying more than their fair share for the drug and the rebate goes back to the plan to reduce premiums for the healthy,” said Ge Bai, a professor of accounting at Johns Hopkins Carey Business School who was one of the authors of the study.

What to watch: Trump era rules to block rebates for Medicare stalled under the Biden administration.

  • * But the issue has been gaining attention on Capitol Hill, with a bipartisan group of lawmakers pushing to outlaw rebates as part of legislation that would cap the price of insulin, FierceHealthcare wrote.

ACA Enrollment Trends

ACA Enrollment Trends
The ACA has had a substantial effect on health insurance enrollment, product mix, and company focus over the past 18 months, according to a report by Mark Farrah Associates (MFA). MFA focused on the fourth quarter of 2013 to the second quarter of 2015. The survey reveals the following:

  • Blue plans gained over 2.3 million commercial members from the fourth quarter of 2013 to the second quarter of 2015.
  • Commercial enrollment for non-Blue plans dropped .3%. Medicare membership increased for Blue plans and non-Blue plans.
  • Non-Blue plans increased their Medicare membership by 35.9% from December 2013 to June 2015 while the Blues saw a 13.3% decline.
  • Medicaid membership experienced the largest gains. As of June 2015, CMS reported 71.9 million Medicaid members, an increase of 13.1 million, since October 2013. For June 30, 2015, health insurance companies that file NAIC statutory statements reported Medicaid membership of 43.8 million, up 13.8 million, since December 2013. It is important to note Medicaid plans that are not regulated by state insurance departments generally account for differences between NAIC and CMS reporting.
  • The top five leaders with Medicaid business include Anthem, UnitedHealth, Centene, Molina, and WellCare. Collectively, they added approximately 5.8 million members to their books, accounting for a 44% share of the growth in Medicaid enrollment over the 18-month period. Anthem had the greatest change in product mix with a shift toward Medicaid. As of June 2015, its Medicaid mix was 15.4%, up from 11.8% at the end of 2013.

Last Updated 05/25/2022

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