The Act of Congress Needed to Improve Drug Costs in America

A recent article in Healthcare Finance News highlighted Congress’ consideration of extending the proposed pharmacy regulatory changes to the Commercial/Employer populations.  The health plan executives provide a very logical reason as to why they do not currently adjudicate manufacturer and pharmacy rebates at the point of sale.  It really boils down to the fact that no one wants to break rank as it will increase premiums which will result in lost customers in the group market and adverse selection in the individual markets.  Basically, they are waiting until the change is regulated so as to not disadvantage themselves in the market place.  Is this reasonable?  Sure.  Does it provide a solution?  Not quite.

Congress is asking all the right questions.  And yes, the safe harbor rule should be lifted for all lines of business.  Why?  Because it is those individuals that frequent the pharmacy the most and those that need to take traditional branded drugs and biologics that are being penalized under the current system.   When rebates are retained by the Pharmacy Benefit Manager (PBM) to offset their administrative costs, known as spread pricing, or by the health plan to lower premiums the individuals with the highest illness burden end up subsidizing the healthier population.   This happens in the Medicare, Medicaid, and Commercial populations.

You really can’t blame the pharmacy manufacturers, PBMs, pharmacy wholesalers, pharmacy retailers. and insurance executives for the current situation.  Nor can you blame them for wanting to maintain the status quo.  They understand the current rules and they know there will be more losers than winners when the rules change.  Remember, the end goal of Congress is lower drug prices.

The most significant quote in this article comes from Lauren Aronson, Executive Director for the Campaign for Sustainable Rx Pricing, "The pace of activity, with three hearings already held this Congress, and three more to be held this week alone, provides reason for optimism that concrete action will soon follow."

At Pulse8, we assist our health plan customers as they evolve their relationships with their PBM, pharmacy network, and manufacturers. Our Formul8 application is powered by advanced analytics, industry accepted benchmarks, and intelligent reporting.   It consistently identifies 5-8% in unit cost and utilization savings opportunities and delivers over a 5:1 return on investment.    It is the reporting that you wish your PBM would provide you, and you know they never will. 

You can visit Pulse8 in Booth #3 during the 13th Annual RISE Nashville Conference March 17th-19th to speak with a member of our team about how Formul8 can help your organization reduce their pharmacy spend. 

Contact us today to learn more or to schedule a demo.

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