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New report finds increase in use of deductibles and coinsurance charging members list prices.


Cost sharing for more than one-third of specialty drug prescriptions filled in 2015 by members of commercial insurance plans was based on undiscounted list pricing, according to an analysis released by the Pharmaceutical Research and Manufactures of America March 29.


For branded drugs in general, patients were responsible for cost sharing tied to a drug's full list price for about 19% of prescriptions filled in 2015, the study found.


Cost sharing was based on the list price because members had not yet reach their deductible, and their coverage had not yet kicked in, or because their plan required that they pay coinsurance, or a percentage of a drug's list price. Coinsurance can be around 30%. Copays, by comparison, are flat amounts that are not tied directly to drug pricing.


Conducted by Amundsen Consulting, a division of QuintilesIMS, the study defines specialty drugs as those used to treat chronic, complex or rare diseases and meeting four or more of several criteria. The criteria included: costs exceed $6,000 annually, initiated/maintained by a specialist, generally injectable and/or not self-administered, requires special handling, requires patient reimbursement assistance, distributed through non-traditional channels such as specialty pharmacies, and/or has significant side effects requiring additional monitoring.


PhRMA maintains current payer practices do not allow members to benefit directly from the increasingly large rebates manufacturers provide. The position is consistent with previous manufacturer arguments in defense of industry pricing practices. (Also see "Drug Pricing: PhRMA Report Aims To Shift Focus To Supply Chain" - Pink Sheet, 19 Jan, 2017.)


"Since list prices do not reflect rebates, these savings are not directly passed on to patients through lower cost-sharing, and patients' out-of-pocket costs for prescriptions filled in the deductible or with coinsurance are higher than they otherwise would be if based on the discounted cost of the medicine," the report states. Rebate dollars may indirectly benefit members by lowering insurance premiums but they are typically not applied to individual fills.



For specialty drugs, the vast majority of scripts (32%) did not reflect manufacturer discounts because members had to pay coinsurance. For brands in general, the primary reason was because members had not reached their deductible; 14% of scripts were filled in the deductible phase (see graphic).





"Use of deductibles and coinsurance in commercial insurance has increased rapidly in recent years," the report notes. "Consequently the share of out-of-pocket drug spending represented by coinsurance has more than doubled over the past 10 years, while the share accounted for by deductibles has tripled."


The public uproar over the price of Mylan Pharmaceuticals Inc.'s EpiPen brought the issue of deductibles to the forefront last summer. (Also see "EpiPen Price Story Highlights Growing Impact Of Drug Deductibles" - Pink Sheet, 30 Aug, 2016.)


PhRMA's research found that scripts subject to a deductible are much more likely to be abandoned at the pharmacy counter compared to those that are not. For brands, 23% of abandoned scripts were subject to a deductible and nearly 30% of abandoned specialty drug fills were in the deductible phase.



PBMs Acknowledge Deductible, Coinsurance Challenges But Dispute Report

Pharmacy benefit managers (PBMs) have begun to publicly recognize that using the undiscounted list price to set cost sharing is "problematic" for patients, PhRMA notes. Statements by Express Scripts Holding Co. and CVS Health Corp. during recent earnings calls acknowledge that high deductibles for drugs put patients in a "very difficult position" and indicate sharing rebate savings directly with patients should be considered as "best practice," according to the report.


Express Scripts CEO Tim Wentworth said during the company's Feb. 15 call that the PBM offers programs to payers that could apply rebate dollars directly to prescription fills but they have not been popular with clients. "We've had rebates at the point-of-sale, for example, for 10 years and we've had less than 20 plans enrolled," he said. "But I think our plans are re-looking at all dimensions of the plan designs."


Nevertheless, the Pharmaceutical Care Management Association, which represents PBMs, took issue with the PhRMA report in a statement issued the same day.


"Rising drug costs is a pricing problem, not a coverage problem. Health plans don't have unlimited funds to pay first dollar coverage on every drug, regardless of its price," PCMA argued. "The simplest, most obvious way for drug makers to reduce costs and improve access is to cut their prices."


The employers and unions that offer coverage "know better that the drug industry what's best for their patient populations. Whether health plans decide to reduce costs by reducing premiums for all or cost-sharing on certain drugs should be up to them – not drug makers."

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