Patients seeking relief from the high cost of health insurance are expressing disappointment with House Speaker Nancy Pelosi’s long-awaited government price negotiation plan for its failure to address sky-high out of pocket health care costs.
“H.R. 3 was a long time in being released, but won’t take nearly as long to reject,” says Terry Wilcox, executive director at Patients Rising NOW, a national patient advocacy non-profit organization. “It fails the central purpose of any drug price reform: Out of pocket relief for patients and ready access to the treatments they need and deserve.”
In recent years, patients have seen their out of pocket costs quadruple as insurance companies achieve record-breaking profits. Earlier this year, a Los Angeles Times analysis found that patients with job-based health insurance have seen their insurance deductibles increase from $379 in 2006 to $1,350 in 2018. Meanwhile, the average out of pocket cost for an in-patient visit cost $4,659 in 2018, according to a report from TransUnion Healthcare.
HR 3: Government Office of Drug Development
Rather than tackle rising insurance premiums or sky-high out of pocket costs, Pelosi’s government price negotiation plan benefits Washington lobbyists by creating a new government office charged with the task of drug development.
The bill also establishes new price control regulations based, in part, on the laws of foreign countries through the creation of a global “Average International Market” price index. Health care companies that refuse to negotiate with the global price indexing would be hit with a “non-compliance fee starting at 65 percent of the gross sales of the drug in question” that rises all the way to 95 percent.
Pelosi Plan: No Regulations on Middlemen PBM Industry
Most shockingly, HR 3 gives a free pass to the pharmacy benefit manager industry, the secretive drug middlemen that pocket billions of dollars in drug rebates intended for patients. Working on behalf of insurance companies, pharmacy benefit managers negotiate large rebates as part of massive drug pricing contracts.
“The proposed legislation is silent on the continuing crisis of middlemen who pocket billions in rebates that rightfully belong to patients. This is unacceptable,” says patient advocate Wilcox of Patients Rising.
Experts, including former Food and Drug Administration Commissioner Dr. Scott Gottlieb, say that the PBM industry is responsible for “Kabuki drug pricing constructs” that drive up patients’ out-of-pocket costs. That’s because co-pays are often based on a percentage of the retail price of a prescription. Insurance companies charge patients based on list price – before the rebate. As a result, some patients can find it more expensive to use their insurance to pay for medicine.
“Right now, middlemen are earning staggering profits by diverting discounts away from the most vulnerable patients,” writes former FDA Associate Commissioner Peter J. Pitts, President of the Center for Medicine in the Public Interest. “This gatekeeper status gives PBMs considerable power to snag big discounts and rebates from drug makers.”
This spring, the U.S. Senate Finance Committee grilled executives from Express Scripts, CVS Caremark, Humana, Optum and Prime Therapeutics about what exactly PBMs do – and why pharmacy benefit managers hide behind secretive contracts that withhold information from patients.
Inexplicably, the Pelosi government price negotiation plan allows the unregulated PBM industry to continue to operate without any restrictions.
“Patients have every right to be disappointed,” says Wilcox of Patients Rising. “They will oppose H.R. 3 and continue the work of insisting upon innovative solutions and advancing realistic reforms that put them at the forefront of the debate.”
