Opinion | Michigan bill to lower Rx drug costs instead would raise them

A little-known measure being floated in Lansing promises to “address” the “cost” of prescription medicines, but actually would do nothing to solve the real challenges Michiganders face when they visit their local pharmacies.

Here’s what you should know.

House Bill 5223 recycles stale claims that so-called “transparency” into the costs to research, develop and manufacturer medicines will somehow help lower costs for patients at the pharmacy counter.

Stephen Rapundalo is president and CEO of MichBio, an Ann Arbor bio-technology company.

This misguided bill fails to provide real cost savings and could actually lead to increased costs and limited access for patients.

Recent data show that medicine costs are growing at the slowest rate in years. In fact, one of the nation’s largest pharmacy benefit managers – the little-known middlemen that manage the relationships between pharmacies and drug distributors – reported this year that it saw the lowest increase in drug spending in 25 years.

At the same time, biopharmaceutical manufacturers are providing larger rebates – more than one-third of a prescription drug’s sticker price – to insurers, middlemen like pharmacy benefit managers and others creating savings of more than $100 billion.

Which begs the question: Why aren’t Michigan patients benefiting from these savings and discounts when they visit their pharmacy? Increasingly, middlemen are determining how much patients pay out of pocket for their medicines.

And it’s not just limited to the massive discounts and rebates not being passed along to patients at the point of sale. The complex prescription drug supply chain is fraught with perverse practices and hidden profits.

For example, pharmacy benefit managers use schemes to prohibit pharmacists from telling patients they could pay less for a prescription drug if they paid out of pocket instead of using their insurance benefit.  

Insurers also use mechanisms like high deductibles and coinsurance to shift the cost burden onto patients.

As a result, half of all patient spending for brand prescription medicines is based off a drug’s sticker price instead of the lower, negotiated rate that their insurance and pharmacy benefit managers are paying for the same medicines.

That means patients are bearing an even higher percentage of their medication costs, while these middlemen are making increased profits at their expense.

These are the practices that need to be addressed through meaningful transparency that gives patients accountability and real relief at the pharmacy counter.

Unfortunately, HB 5223 misses the mark completely. Instead, it proposes policies that will harm job creation and innovation while creating uncertainty in the marketplace that could actually increase what Michiganders pay out of pocket for the drugs they rely on for treatment and quality of life.

Affordability in health care should be a top priority for Michigan legislators. But Michiganders deserve thoughtful policies that provide real, meaningful relief to patients, not misguided shots in the dark to score political points.

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Kevin Grand
Thu, 04/05/2018 - 7:22am

Did I miss the part where Mr. Rapundalo explained why Americans still pay more for prescription drugs than people in other countries?

Since Americans pay for the R&D, it stands to reason that we should be paying the lowest cost.