Drug makers set prices independent of rebates, AHIP says
Competition drives drug prices and results in higher rebates, insurance organization says.
The level of competition, not price, determines drug rebates, contends America's Health Insurance Plans.
Big pharma is largely responsible for rising drugs prices, AHIP said, citing the results from a Pharmaceutical Care Management Association report and its own study done by Milliman, an actuarial consulting firm.
The level of rebates negotiated with drug makers is driven by market competition, and not the price of the drug, AHIP said.
Drug-makers set prices independent of rebates.
Among Part D brand drugs with rebates, drugs with the most robust competition provided the highest rebate, the insurance organization said.
AHIP engaged Milliman to analyze actual rebate data and shed light on the prevalence of drugs with rebates. Milliman looked at rebate levels as a percentage of drug spend by level and type of market competition, and the average annual cost and price trends for drugs with and without rebates.
There was no link between the level of rebates offered and how fast drug prices increased between 2013 and 2016, AHIP said.
High drug prices are under the spotlight as the Trump Administration and legislators look for ways to reduce high healthcare costs.
Manufacturers negotiate drug rebates with pharmacy benefit managers. Until recently, the rebates have been passed on to insurers to lower the price of premiums.
With increased scrutiny of costs however, insurers such as Aetna and UnitedHealthcare have said the rebates will instead be passed directly to the consumer.
Opponents to this have said these direct discounts are unfair to healthier members who are footing the bill through higher premiums.
AHIP also said that reducing plan leverage by requiring a prescription drug to be on a formulary leads to lower rebate savings.
Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com
