Medication Costs are Sky High and We Want Answers

It’s no secret, medication costs are outrageous. How many times have you or a loved one seen a bill for a necessary medication and you feel your stomach tied in knots? Contemplating between medication and groceries is a frightening reality for many. On one hand someone NEEDS a life saving medication, on the other they need food. What the hell? How did we get here? How can we get out from under this rock? Many people feel like they are being held captive by the healthcare system with no answers in sight. Let’s explore why drug costs are so high and explore some techniques you can use to save some money while getting the medication you need.

The United States pays the highest prices for drugs in the world, with the majority of healthcare costs toward prescription drugs. The costs accumulated in medication spending are greater than any other country in the world, some speculative reports predict medication spending will eventually outpace doctors services and hospital care. This situation has become so adverse that people on none or few medications are worried due to the rising cost of insurance premiums to support the medication costs. In the United States, we use a cost-sharing model to acquire prescription medications. This means when you are prescribed medications you split the costs with your insurance plan, which still makes the cost of some medications unaffordable. Don’t get me wrong, many medications are affordable and can even be free with some pharmacies or plans but we start to throw treatments, doctor visits, hospital admissions into the mix the cost of literally living becomes outrageous. So what impact does this have on the patient? Some patients can’t afford the medications and cannot take them, some take them but not as prescribed so they lose efficacy or in the case of an HIV patient the virus may become resistant to treatment requiring more drugs and more money. In addition, conditions like cancer, multiple sclerosis and rheumatoid arthritis are treated with specialty drugs and are generally the highest cost medications. Some medications in these classes can cost as much as $450,000 A YEAR for treatment. Many Americans are starting to express concern about the high cost of medications to the point of mishandling their medications in order to save money. For example, many people report cutting pills in half, skipping doses or shorting themselves the full dose of insulin which helps control diabetes. These ill-advised cost saving methods are doing more harm than good. The woman cutting her blood pressure medications in half is at higher risk for cardiovascular disease and stroke, the man only administering half a dose of insulin is risking blood sugar spikes and vascular complications. People with autoimmune conditions like rheumatoid arthritis are in excruciating pain because they cannot afford the full dose. People are in pain, they are suffering and quite frankly they are pissed off.

I left my traditional pharmacy role because I started getting pissed off too, some of the examples I gave in the paragraph above are examples of real life patients I have met. Having my hands tied while someone pours their heart out and in many cases walks away from the pharmacy without their needed medications because they cannot afford them has broken my heart enough. I went to school to be a pharmacist and help people and I found that the more I push pills the less help I am doing. I thought, there are thousands just like me, bright-eyed and bushy tailed students fresh out of school, they told us we were going to make a difference in healthcare but I rarely saw opportunities outside of the usual copay cards (a discussion for a different day) and other scams to get patients on a medication for 3-6 months only to tell them the honey moon stage is over, its now time to fork over some cash.

Many people, including myself wonder, how can this happen in The United States of America, one of the wealthiest countries in the world and we can’t even get people the medications they need. Let’s dive deeper into this issue, drug companies develop medications and have exclusive rights to sell them at monopolistic levels for a period of years depending on the medication type and formulation. Sure, don’t we all want a return on our investments? But their return is coming at the expense of lives which I perceive as unacceptable. Pharma companies are armed with the budgets for advertising, (The U.S. and New Zealand are the only 2 countries in the world that allow drug advertising so riddle me that.) lobbying and research & development but what do we have in our tool box? Many patients cannot afford their medications much less fight for any true resolution for the issue. Pharma companies are price gouging claiming its for research and development however, new research plans are funded through the National Institute of Health using tax dollars, according to David Mitchell from the nonprofit, Patients for Affordable Drugs. David states much of this surplus funding is getting dumped into lobbying, sales and advertising not research and development like the pharma companies would want you to believe. At this point you may be thinking oh this is why my drugs are so expensive, unfortunately, there’s more.

I want to preface this by saying, this may be one of my personal most hated components of the medication system. Pharmacy Benefit Managers (PBMs). If you have never heard of a PBM before pay close attention, PBMs run the prescription drug insurance programs so they are in charge of what you pay, in addition, PBMs do not disclose how they take transactions or what the reimbursement rates are with the insurance companies they service. Does it raise any red flags that companies in charge of your medications are operating in secrecy? Of all things in the world where transparency should be a pillar, there is none, oh and by the way doctors and hospitals can bill for these expensive drugs granting them a nice sum of money on the back end. No wonder citizens are losing trust in the current healthcare model. Many of these PBMs are making it increasingly difficult for smaller independent pharmacies to stay in business. Let’s explore this mechanism further, prescription drug rebates are paid to PBMs by the drug manufacturers after the point of sale and can make 40 percent or more of the drugs list price; there are some factors like drug cost and market competition that keep this percentage within a range. Many PBMs report that 90% of rebates are passed on to health plans and payers, however, smaller payers and employers have reported they did not receive this slice of the pie. Back to the part were PBMs operate in secrecy, they keep their drug-rebates confidential within the confines of the contracts between themselves (The PBMs) and the manufacturers, commercial plans have limited access to the degree of cost saving opportunities for their members. Since PBMs are reimbursed partially on the rebates they acquire and calculated based on a percentage of a drug’s list price, it seems PBMs are incentivized to prioritize high cost medications over more economical options. Many incidences of drug tiering (selecting higher cost drugs) have been documented, for example, selecting higher cost brand name drugs, biologics or other expensive options that usually have a more cost effective treatment alternative. Oh and guess who the responsibility of bearing those high prices falls on? If you guessed the patient… you are correct! Especially in the cases of cost-sharing or high-deductible plans (usually if it includes the pharmacy benefit its high-deductible).

This all seems pretty outrageous right? Keep reading if you want to be even more infuriated. Additional controversies surrounding PBMs and the mechanisms in which they derive revenue from reimbursement pharmacies has even started bleeding into the generic drugs realm. Traditionally, generic drugs have been a safe haven for patients that do not need or cannot afford expensive brand name drugs. This concept may not be entirely true anymore. PBMs utilize a Maximum Allowable Cost (MAC) schedule, a pre-generated list of generic medications that includes the maximum price PBMs will pay for each medication. The MAC schedule has traditionally been confidential to health plans allowing the PBMs to charge employers and health plans a higher price. The PBM acquires the difference between the MAC price they pay the pharmacy and the price the health plan pays, aka “The Spread.” A recent example took place in 2018 where two PBMs reimbursed pharmacies $2.3 billion and billed Medicaid (your tax dollars) $2.5 billion for their formulary of generic and brand drugs resulting in a $200 million dollar spread. Some recent legislation proposed that PBMs need to update their MAC for generic medication prices to protect pharmacy margins (especially small independent pharmacies with less negotiating leverage), however the PBMs are not required to to address the issue of disclosing “The Spread,” which ultimately is the component passed on to payers and patients. Plus, this legislation is only reflective of generic drug pricing and does not include brand names which can have astronomical pricing schedules.

Are you ready for something so sick and twisted you might feel the urge to gag? There is a “Gag clause” written into many PBM to pharmacy contracts which prohibits pharmacists from disclosing to patients that a drug maybe less expensive if paid for directly without the use of insurance. This allows PBMs to profit off patients copays. A study in the JAMA journal (Karen Van Nuys et al., “Frequency and Magnitude of Co-payments Exceeding Prescription Drug Costs,” Journal of the American Medical Association 319, no. 10 (2018): 1045–47.) disclosed that copays were higher than cash pay for one in four drugs purchased by Medicare patients using their Part D plan, this study also disclosed that 12 of the top 20 most prescribed drugs in 2013 were overpaid by greater than 33 percent. This gag clause literally prevents pharmacists from disclosing medication costs unless specifically asked, even then some contracts require costs to remain confidential. The bright side is, law makers have identified this issue and have started to crack down on gag clauses, however, there are still so many issues that have no answers but there is hope.

There are additional techniques to save money on medications that you can perform on your own without he assistance of a medication management fanatic like myself. I will discuss these briefly and will go more in depth in a future post. Option 1, this may be counter to options discussed previously, switching to a generic alternative can still save money compared to paying for brand. Option 2, ask for 90 day supply, this will cost a little more upfront but overall cost compared to three, thirty-day supplies will be lower. Option 3, find pharmacies that are preferred in your healthcare network, generally in-network pharmacies have more options for you as the patient. Option 4, set up a healthcare flexible spending account or health savings account, you can set money aside before taxes to pay for eligible healthcare expenses. Anything out-of-pocket like deductibles and copays is reimbursable with money from these accounts. Option 5, similar to option 4, setting up a health reimbursement arrangement with your employer, this is where they assist in putting money aside for health related expenses eligible for reimbursement (this requires some negotiating with your employer). Hopefully, this article provided some understanding of the system and some ways you can help yourself or a loved one save cost and still get the treatment needed. If you are looking for more advanced techniques that require clinical training or want to explore options further feel free to contact BlueZone Healthcare Advocates.