A new report released by PhRMA, the industry group representing the US’s leading pharmaceutical and biotechnology companies, found that commercially insured patients are paying undiscounted list prices for one in five branded prescriptions, accounting for half of out-of-pocket spending on branded drugs. The report points out that instead of paying the discounted price negotiated by the patient’s health plan, patients are instead being billed based on full list prices.
In the past, this issue would not have had as significant of an impact as it does now. The reason is that a decade ago, most out-of-pocket spending on prescription drugs was based on copays, rather than deductibles and coinsurance. With copays, a patient will pay a fixed amount for each prescription, irrespective of the actual price of the drug. However, deductibles require a patient to pay the entire list price of the drug until they reach their deductible amount, while coinsurance requires payment of a percentage of a drug’s list price. Thus, both deductible and coinsurance plans link out-of-pocket costs to drug prices directly.
Compounding this problem, the popularity of these two types of plans has risen dramatically in recent years. PhRMA estimates that between 2012 and 2016 alone, the percentage of commercial health plans requiring patients to meet a deductible more than doubled, from 23% to 49%.
Given that rebates to insurers by drug manufacturers can reach 30–55%, depending on the type of medication, the report asserts that the savings are not being directly passed down to patients when deductible and coinsurance plans bill patients based on the full list price of a drug. PhRMA estimated that despite the fact that only 19% of branded prescriptions were filled under deductible or coinsurance plans, these particular prescriptions accounted for over half (52%) of all out-of-pocket spending for patients in 2015.
As insurers negotiate increasingly larger rebates off list prices, the issue of how to cost-share in order to control out-of-pocket costs for patients promises to continue to attract debate.