On this episode of the podcast, Terry and Bob discuss the perverse status quo in the American healthcare system where those with rare and chronic diseases subsidize the healthy through the prescription drug rebate system.

Each year, drugmakers pay hundreds of billions of dollars to pharmacy benefit managers to access insurers’ formularies – the list of medicines that insurers promise to cover. Increasing rebate demands are behind the sticker price increases in prescription drugs in recent years. Yet net drug prices – list prices minus rebates – have actually fallen over the last couple of years.

Since those with rare and chronic conditions have the most significant medicinal demands, they are the patients who generate these massive rebate dollars. These rebates are then used to slightly reduce premium costs for everyone else, meaning the sick essentially offset costs for the healthy. Bob highlights how the sickest four percent of patients help lower healthcare costs for the 96 percent who are healthy. That these sick patients are viewed as cash cows is immoral.

Terry interviews Rep. Michael Burgess (R-TX), who spent nearly 30 years as a practicing physician before joining Congress. Rep. Burgess argues that one of the best ways to fix this rebate problem is price transparency. If patients can shop around for less expensive treatments, they can save money and encourage the movement away from the rebate system. 

Rep. Burgess also argues that price transparency can help alleviate the problems caused by the increasing use of copay accumulator programs. Under copay accumulators, patients’ copay assistance isn’t counted toward their deductibles and out of pocket maximums, meaning they are stuck with massive costs when their copay assistance runs out mid-year. By shopping for less expensive alternatives, patients hurt by copay accumulators can save money.

Rep. Burgess is a big proponent of group healthcare plans, which provide most Americans with health coverage through their employers. He points to President Trump’s efforts to expand association health plans, which would allow small businesses access to these large group markets that have strong protections for those with preexisting conditions. He explains how the elimination of Obamacare’s individual mandate will spur coverage benefit designs that patients actually want because patients are no longer forced to buy insurers’ products.

Patient correspondent Kate Pecora speaks with a patient who goes by @PatientTexas, a constituent of Rep. Burgess. This patient has multiple sclerosis and describes her challenges with a copay accumulator program. She points out how insurance companies are double-dipping with copay accumulators, making money off copay assistance and then from deductibles, while also raking in premiums. She discusses the hoops she has to jump through each month to get the medications she needs.

Listen HERE