Pharmaceutical prices have steadily increased in the U.S, making the costs of prescription drugs some of the highest in the world.
Experts attribute the increase to drug rebates, rather than pharmaceutical companies’ claims of recovering research costs and development of the product. Bob Marino, managing consultant at OneDigital Hartford, takes a closer look at how these drug rebates function to benefit the pharmacy benefit managers (PBMs) and the ripple effect this has on consumer pricing in the article “Do Drug Discounts Contribute to Rising Prices?” by Managed Healthcare Executive.
A drug manufacturer will use a ‘middleman'—a pharmacy benefit manager or PBM, to help distribute and sell their medications. The PBM helps to put together formularies which include drugs with greater rebates or discounts. They also receive a portion of the rebates as well. The drug manufacturers in turn keep their prices high or increase them to pay the discounts or rebates. The PBM’s can ‘leverage’ for more rebates by choosing to offer or not offer a drug manufacturer’s medication on the formulary. This practice leads to artificially inflated pricing and greater costs for all consumers. We as benefit consultants see the results in the increases in pharmacy trends and costs our employer groups are being charged."
—Bob Marino, Managing Consultant, OneDigital Hartford
To learn more about how your organization can combat increasing pharmacy costs related to your health insurance plan, contact your OneDigital representative today.