PBMs and Insurers Undermine Oral Parity

  • by: Robert Goldberg |
  • 11/13/2017
A recent study by University of North Carolina researcher "Stacey Dusetzina and her colleagues found that patients paying the most for their cancer pill prescriptions experienced increases in their monthly out-of-pocket costs. For those whose costs were more expensive than 95 percent of other patients, their out-of-pocket costs increased an estimated $143.25 per month. Those paying more than 90 percent of what other patients paid saw their costs increase by $37.19 per month.

The proportion of medication fills requiring patients to spend more than $100 per month out-of-pocket increased from 8.4 to 11 percent for plans subject to parity laws, while plans outside of the laws saw a slight decline.

Dusetzina said that one issue that may be impacting cost is that the parity laws do not address the affordability of cancer drugs."

Indeed, what good is parity if PBMs and health insurers continue to shift every patient who needs cancer drugs into the co-insurance or highest cost sharing tier?

Adam Fein's analysis of cost shifting underscores why oral parity is being undermined: 

"In the charts below, I summarize employers’ 2017 pharmacy benefits by examining (1) cost sharing tier structures, (2) average copayments, by formulary tier, (3) type of cost sharing (coinsurance and copayment), and (4) coinsurance structures. I’ll investigate the growing role of deductibles in a follow-up article.

This year’s results show massive cost-shifting for specialty drugs. For the first time, a majority of plans have four tiers. Economically-debilitating coinsurance—in some cases with no limit on out-of-pocket expenses—is common.

When people complain about “drug costs,” they are actually thinking about the share of costs that they pay. Last week, I highlighted Prime Therapeutics’ data showing very slow growth in post-rebate drug spending. Given the new Kaiser/HRET survey, it looks like patients may not always be getting the benefit of lower costs."

In another blog Fein notes: "For 2017, about 8 out of 10 U.S. workers must meet a general annual deductible before their plan pays for most healthcare services. Prescriptions are typically excluded from the deductible.

However, this year’s survey shows that one-third of workers in high-deductible plans now faces a separate prescription drug deductible. These plans shift 100% of the prescription cost to the patient until the deductible is met.

After reviewing the latest data, I offer some observations on how deductibles are altering the pharmaceutical and pharmacy industries. The bottom line: Patients who must cover the costs of their drugs shop for better deals and cheaper pharmacies. Get ready for the consumerization of the pharmacy industry!"

The problem is that much of the price of drugs is being used to subsidize rebates and discounts for PBMs and insurers and the copay assistance required by higher cost sharing.   Drug companies are paying rebates and then paying for the markup on the rebated prices at the backend.  Where's the incentive to reduce patient costs?  The fact is, even if drug prices were cut, PBMs and insurers would still get their spread and increase cost sharing.   

Consumerization requires a model that rewards consumers instead of model screws them. (See below) 


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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