Washington, D.C. (October 12, 2017) — Providing access to discounted medicine prices at the point of sale could save certain commercially insured patients with high deductibles and coinsurance $145 to more than $800 annually, according to a new analysis from Milliman that was commissioned by the Pharmaceutical Research and Manufacturers of America (PhRMA). The data also show sharing negotiated rebates with patients would have a minimal impact on premiums because it would only increase health plan costs on average 1 percent or less.
“Shifting costs to the sickest patients by requiring higher rates of cost-sharing undermines the very purpose of insurance,” said Stephen J. Ubl, president and CEO of PhRMA, who cited recent Kaiser Family Foundation data showing patients’ out-of-pocket spending is growing faster than underlying medical costs. “This analysis demonstrates that sharing negotiated rebates with patients can lower their out-of-pocket costs with a minimal impact on premiums.”
Negotiations between biopharmaceutical companies and health plans often result in significant rebates. According to a recent study from the Berkeley Research Group, more than one third of the list price for brand medicines is rebated back to payers and the supply chain. These rebates totaled more than $100 billion in 2015 and are growing every year.
For patients with high deductibles or coinsurance, their out-of-pocket spending on medicines is based on the full list price, even if their insurer receives a steep discount. In fact, an analysis from Amundsen Consulting found more than half of commercially insured patients’ out-of-pocket spending for brand medicines is based on the full list price.
According to today’s Milliman analysis, these patients would benefit from receiving access to discounted prices at the point of sale. Depending on factors like plan design and medical out-of-pocket spend, some patients may see their annual out-of-pocket spending reduced. Other patients would pay less each month and could have their costs spread throughout the year, so it would take longer to hit their out-of-pocket maximum and resulting in lower monthly costs.
Hypothetical examples to illustrate the data include:
- Mary has diabetes and is enrolled in a high-deductible health plan with a copay. She spends $1,000 annually out of pocket on her medical and pharmacy expenses. She would save approximately $359 annually if negotiated discounts were shared.
- Kevin has diabetes along with several other health conditions and is enrolled in a high-deductible health plan with coinsurance. He spends $5,000 annually out of pocket on his medical and pharmacy expenses. He would save about $800 annually if negotiated discounts were shared.
- Joe has chronic respiratory disease and is enrolled in a high-deductible health plan with coinsurance. He always reaches his maximum out-of-pocket limit on his medical and pharmacy expenses early in the year. He would save $204 per month until he meets his deductible and then $41 per month until he reaches his out-out-pocket maximum, allowing him to spread his costs throughout the year.
View the full analysis here.
The Pharmaceutical Research and Manufacturers of America (PhRMA) represents the country’s leading innovative biopharmaceutical research companies, which are devoted to discovering and developing medicines that enable patients to live longer, healthier, and more productive lives. Since 2000, PhRMA member companies have invested more than $600 billion in the search for new treatments and cures, including an estimated $65.5 billion in 2016 alone.