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When it comes to high drug costs, the real problem is the price

Guest Contributor
Guest Contributor
Opinion
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By Keith Lee

Drug prices are out of control. Today, too many Nevadans are faced with the stark choice of choosing whether to pay their bills or to pay for their medicines.

The prices of some popular medicines have increased five or six hundred percent in recent years. This leads to higher health insurance premiums for everyone and reduces access to drugs for people who really need them.

Of course Big Pharma has been working relentlessly to cloud the issue, but the reality is that drug prices are set by just one player in the supply chain—drug makers. Their latest ploy is to blame health insurance providers and pharmacy benefit managers (PBMs) for the high prices they supposedly set. Nevadans shouldn’t be fooled.

Insurance providers and PBMs are actually consumers’ bargaining power, working to negotiate lower prices and shield patients from higher costs. PBMs specifically negotiate directly with drug makers to drive competition for more generic drugs and secure savings through rebates and discounts that are passed on to consumers.

Without insurance providers and PBMs, drug costs would be far higher. PBMs save payers and patients 40 to 50 percent on their annual prescription drug and related medical costs compared to what they would have spent otherwise. That’s an average of $941 per person per year.

The real problem with the cost of prescription medicines is the price.

It’s no surprise that drug makers are trying to shift the blame – Big Pharma is taking advantage of a broken system, drastically increasing prices and blocking affordable generic competition. The numbers tell the story.

For example, the price of Evzio – which is used to treat opioid overdoses – increased 652 percent from 2014 to 2017. This happened in the midst of the opioid epidemic. The price of antidepressant Wellbutrin increased nearly six-fold in that same timeframe. In fact, the Associated Press found there were 96 drug price hikes for every drug price cut in the first 7 months of 2018.

Big Pharma is able to jack up the price of their medications in part due to the lack of competition in the prescription drug market. Drug makers have sought to aggressively protect their monopolies by creating patent fortresses where they accumulate redundant patents specifically to block any generic alternatives. For example, the world’s top-selling drug, Humira (adalimumab), has sought more than 100 patents, many of which only exist to extend its monopoly. Patent monopolies have been a problem for decades and have only gotten worse over time.

PBMs were developed several decades ago as a private market solution to this very problem, and independent research has shown that PBMs are an effective solution to lowering health-care costs. This includes research from the Federal Trade Commission (FTC), the Congressional Budget Office (CBO), and the Government Accountability Office.

The bottom line is that PBMs partner with health insurance providers to save money – savings that are ultimately passed onto the consumer in the form of lower premiums. Two of the largest PBMs – CVS and ExpressScripts – report that they return up to 98 percent and 95 percent of rebates, respectively, to those they serve in the commercial market.

Nevadans need affordability – and that’s possible if we all work together. It comes from robust market competition and empowering patients with real control over their choices. It comes from costs that remain flat, or even go down year over year. And it comes from accountability and transparency that protects hardworking taxpayers.

Nevadans deserve better. It’s time for all of us – insurance providers, doctors, nurses, hospitals and pharmaceutical companies – to work together to ensure that every Nevadan gets the affordable care they deserve.

Keith Lee is a paid lobbyist for, among others, Nevada Association of Health Plans (NvAHP), a statewide trade association representing seven large insurance companies providing health benefits/medical coverage to Nevadans.

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