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PBMs: When You're Buying Meds They Get The Rebates, You Get The Shaft

Last week a pharmaceutical industry expert named Antonio Ciaccia, testified in front of the Indiana General Assembly about a bill that could potentially lower what you pay for your prescription medication. The bill would force companies to pass some of the savings and discounts to you, rather than a PBM.

A PBM is a Prescription Benefit Manager, a company that serves as the middleman between the drug 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 some of the savings on to you.

“Drug makers will point at PBMs and say, look, we have to raise our prices significantly in order to provide the big discounts that are provided 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 their product. Because of how the system works now, Ciaccia says the opposite happens with prescription drugs. Companies increase their prices and increase discounts for prescription benefit managers, who , in turn, allow the customer’s insurance to okay that particular medication.

Because PBMs are not subject to federal kickback laws, they can benefit from the big rebates.

One 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 the $284, paying for the rebates and discounts given to the PBM.

Ciacca said that $200 billion in discounts and rebates are what are up for grabs in the Indiana legislature.

“Lawmakers are proposing of those discounts, at least 85 percent that the PBM receives should be passed along to the patient at the pharmacy counter so that they don’t have to pay the inflated sticker prices.”

“The bill ended up passing out of committee, which if it makes it through the entire process, those discounts would be reflected for patients at the pharmacy counter, saving them a ton of money when they’re paying out of their pockets,” he said.

He said the bill would help restore the root functionality of insurance, which is to make sure you’re covered, not having to pay enormous prices, if you’re sick.



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