Indiana General Assembly Addresses Prescription Drug Costs
Last week, a pharmaceutical industry expert named Antonio Ciaccia testified before the Indiana General Assembly about a bill that could potentially reduce what you pay for your prescription drugs. The bill would require companies to pass on a portion of the savings and rebates to you, rather than a PBM.
A PBM is a Prescription Benefit Manager, a company that acts as an intermediary between the pharmaceutical company and your insurance. They help get discounts, but those discounts and savings often end up going somewhere other than the customer.
Ciaccia testified in favor of a bill that would regulate PBMs in Indiana, requiring them to pass on a portion of the savings to you.
“Drugmakers will point the finger at PBMs and say, listen, we need to raise our prices significantly in order to provide the deep discounts offered by these gatekeeper PBMs,” he said.
In a normal transaction, a company will lower its prices or increase its quality or quantity to entice people to buy its product. Because of the way the system works now, Ciaccia says the opposite happens with prescription drugs. Companies raise their prices and increase discounts for prescription benefit managers, which in turn allow the customer’s insurance to endorse that particular drug.
Since PBMs are not subject to federal bribery laws, they can qualify for deep discounts.
An example is Lantis, an insulin product for diabetics, which costs $284 per vial. Ciaccia says the drug company ends up making about $40, while the consumer, paying out of pocket, ends up giving closer to $284, paying the rebates and rebates given to PBM.
Ciacca said $200 billion in discounts and rebates are up for grabs from the Indiana legislature.
“Legislators are proposing that of these rebates, at least 85% that PBM receives be passed on to the patient at the pharmacy counter so they don’t have to pay the inflated sticker prices.”
“The bill ended up being voted down by the committee, which if it goes through the whole process, those discounts would be reflected for patients at the pharmacy counter, saving them a ton of money when they pay out of pocket,” he said. noted.
He said the bill would help restore the core functionality of insurance, which is to make sure you’re covered, without having to pay huge prices, if you get sick.