Tag Archives: rebates

Series on pharmacy benefit managers makes complicated topic easier to understand

Joseph Burns

About Joseph Burns

Joseph Burns (@jburns18), a Massachusetts-based independent journalist, is AHCJ’s topic leader on health insurance. He welcomes questions and suggestions on insurance resources and tip sheets at joseph@healthjournalism.org.

Photo: Thomas Hawk via Flickr

One of the most complicated topics to cover in health care today is the role of pharmacy benefit managers (PBMs). Employers and health plans hire these middlemen to manage their prescription benefit programs for workers and health plan members.

Not only do PBMs contract with health plans, but some large health plans, notably UnitedHealthcare which owns Optum, have their own PBMs. Late last year, CVS Health, one of the nation’s largest retail pharmacy chains and owns Caremark, a PBM, said it would buy Aetna, one of the country’s largest health insurers. That deal is pending regulatory review, as Bruce Japsen reported for Forbes early this month. Continue reading

CMS initiatives may be good news for some beneficiaries

Liz Seegert

About Liz Seegert

Liz Seegert (@lseegert), is AHCJ’s topic editor on aging. Her work has appeared in NextAvenue.com, Journal of Active Aging, Cancer Today, Kaiser Health News, the Connecticut Health I-Team and other outlets. She is a senior fellow at the Center for Health Policy and Media Engagement at George Washington University and co-produces the HealthCetera podcast.

Photo: moodboard via Flickr

This post was co-written by Joseph Burns (@jburns18), a Massachusetts-based independent journalist and AHCJ’s topic leader on health insurance. He welcomes questions and suggestions on insurance resources and tip sheets at joseph@healthjournalism.org.

You may have seen the April 2 press release from the Centers for Medicare and Medicaid Services that highlighted the steps it is taking to, among other efforts, advance a more patient-centered approach, reinterpret standards for supplemental benefits under Medicare Advantage plans, lower prescription drug prices and address the opioid crisis. While that’s a lot to promise in a page and a half, more details are available in CMS’ 2019 Medicare Advantage and Part D Rate Announcement and Call Letter. Be forewarned, however, that many journalists may need experts to interpret the implications of what CMS calls its call letter. Continue reading

ACA rules force health insurers to increase spending on care delivery

Joseph Burns

About Joseph Burns

Joseph Burns (@jburns18), a Massachusetts-based independent journalist, is AHCJ’s topic leader on health insurance. He welcomes questions and suggestions on insurance resources and tip sheets at joseph@healthjournalism.org.

The percent of premium dollars allocated to administrative costs and profit dropped in all markets since the introduction of the 80/20 rule.

The percent of premium dollars allocated to administrative costs and profit dropped in all markets since the introduction of the 80/20 rule. (Click to enlarge image.)

A new report on how health insurers are complying with the medical loss ratio rules shows insurers spent more on care delivery and less on profit and overhead in 2013 than they did in the previous two years.

The report, “Consumers Benefited From 80/20 Rule in 2013,” from the federal Department of Health and Human Services (HHS) shows that the percentage of consumers insured by companies that met or exceeded the requirements under the MLR rules has risen each year since the rules became effective in 2011. Tables accompanying the report offer some great story ideas for journalists who want to dig deeper into why insurers in their states would pay rebates to consumers rather than put those funds into care delivery.

Also called the 80/20 rules, the MLR regulations in the Affordable Care Act require insurers to spend a minimum of 80 percent of premium income on delivering care (and not on profit and overhead) in the small group and individual markets and at least 85 percent of premium income on care delivery in the large group market.

Under the MLR rules, if insurers fail to spend at least at these levels, they have to rebate the difference to consumers. Those rebates are due by Aug. 1.

“In the first three years of the MLR program, individual and employer plan enrollees received or will receive over $1.9 billion in refunds,” the HHS report said. Continue reading

Drug pricing, rebates to shift with health reform

Joanne Kenen

About Joanne Kenen

Joanne Kenen, (@JoanneKenen) the health editor at Politico, is AHCJ’s topic leader on health reform and curates related material at healthjournalism.org. She welcomes questions and suggestions on health reform resources and tip sheets at joanne@healthjournalism.org. Follow her on Facebook.

Drug rebates aren’t the headline grabbing element of health reform; for some of us they are probably in the eye-glazing category. 

But Medicaid drug rebates do change a bit under the Affordable Care Act, and various proposals about rebates have surfaced – and will again – in the perpetual debates about Medicaid and Medicare savings. Of course, once more people are insured under health reform, more will have prescription drug coverage. They will then be paying less, indirectly benefiting from rebates not visible to the uninsured consumer.
Health Reform core topic

Here’s a chance to understand rebates better, through a recent piece by  Forbes’ Matthew Herper.

“The free market is alive and well when it comes to drug prices – if you’re an insurance company or a government program. But not if you’re a consumer,” Herper writes.

Consumers, at least those paying for their medicine out of pocket, pay sticker price. That can be as little as a few dollars for a common generic to around $300,000 a year for a rare pediatric drug.

But drug companies do negotiate rebates. They just don’t negotiate with you and me. They negotiate with the big payers, such as the government programs like Medicare or insurers or the pharmacy benefit managers. Herper quotes estimates that the rebates – the difference between “full price” and what the payers really end up paying – come to about  $40 billion a year. His article includes estimated rebates – in the billions – for a number of common drugs. And he gives some advice on how to figure out those figures. He looked at  prescription data tracking service IMS Health‘s lists of gross sales at pharmacies of some common drugs, and then compared those numbers to net sales the companies report to the SEC. (It’s not a precise number because other factors, including wholesalers’ behavior, can come into play but it’s a good indicator). Drugs with lots of competition tend to have much bigger rebates, naturally, than those without.

Herper looks at Nexium as an example. Nexium is often used as poster child, or poster drug, for how a pharmaceutical company manages to obtain patents on a “new” drug that, chemically, isn’t all that new. Those of you who attended Health Journalism 2012 in Atlanta heard Otis Brawley, chief medical officer and executive vice president of the American Cancer Society, talk about it.

Herper writes:

The most stunning discount is for Nexium, the purple pill for heartburn sold by AstraZeneca and derided by many as the perfect example of a me-too drug. Astra is giving back 60% of gross sales, most likely in the form of rebates. IMS lists Nexium as the third-bestselling drug in the country based on gross sales of $6.2 billion. But AstraZeneca reports U.S. Nexium sales of just $2.4 billion …

He concludes: “The good news here is that, in the world of health insurers and drug giants, the free market is having an effect on drug prices. The bad news is that you have to be participating in this market by being insured to get those reduced rates. People who walk in off the street pay full price.”

Joanne KenenJoanne Kenen (@JoanneKenen) is AHCJ’s health reform topic leader. If you have questions or suggestions for future resources, please send them to joanne@healthjournalism.org.

The small print, in case you were wondering what rebates are in fact in the health law: It does raise the  Medicaid drug rebate percentage for more brand name drugs to 23.1 (there are few exceptions, including some pediatric drug use), raise the Medicaid rebate for “non-innovator, multiple source drugs” to 13 percent of average manufacturer price and extend the drug rebate to Medicaid managed care plans.