Home Pharmacy practice Time to End Shady Medicare Practices: Nicole M. Johnson

Time to End Shady Medicare Practices: Nicole M. Johnson


CLEVELAND – The Ohio legislature may soon take important action to protect patients from unfair, profit-driven insurance practices. Unfortunately, this will not completely solve this problem.

Ohio patients are subject to questionable contracting practices between some drug companies and the Pharmacy Benefit Managers (PBMs), who manage insurers’ drug plans. Instead of reducing drug costs for patients, these companies use drug discounts to block competition with other drugs, even if they are cheaper or provide better treatment for the patient.

As a doctor and patient, I have seen insurance companies tell patients that they would not cover a drug prescribed by the doctor unless they first take another drug on their list and prove that it does not work. It does not matter to these intermediaries if this other drug costs more or causes bad side effects, or even if the patient’s health deteriorates during this period. This is a practice called “non-medical switching”.

The Ohio Legislature is considering Bill 153 end nonmedical drug switching, which would be a welcome step towards protecting patients from profit-oriented insurance practices. But a more comprehensive solution is needed to prevent companies from playing with the system with discounts.

I’ve seen the price of life-saving drugs like epinephrine and insulin skyrocket, forcing patients to go without or ration them. A 2019 Kaiser Family Foundation survey found that 29% of Americans did not take their medication as prescribed because of the cost, and about three in ten people said their health had deteriorated as a result.

These anti-competitive practices are called “rebate wallsOr “discount traps” because they block competitors and block physician prescribing decisions.

Successful drugmakers, insurance companies and PBMs all benefit. Patients are in pain and doctors are forced to watch with their hands tied behind their backs.

There are several ways to construct rebate walls. Pharmaceutical companies give discounts to PBMs in exchange for preferred placement on their formulas (lists of drugs covered by insurance). A ‘blockbuster’ drug is approved to treat many diseases, giving it enormous potential for reimbursement. The drugmaker can tap this potential for PBMs and secure contract terms that block competition – discount walls.

Competitive drugs that do not have blockbuster potential or are newly approved have no chance of reaching these large numbers and must accept lower placement on PBM formularies. A drug maker can also create a wall of discounts by penalizing PBMs for giving competitors a higher place on their formularies.

Additionally, insurers can force pharmacies to fill prescriptions for the PBM’s preferred drug – instead of one prescribed by a doctor – until 90 days have passed or the PBM’s preferred drug clearly injures the patient. (“Step therapy”).

By blocking competition, the walls of discounts can deny patient access to cheaper life-saving drugs. The Pacific Research Institute published a Analysis 2020 showing that competition between brand name drugs can reduce prices by up to 26%, saving patients up to $ 5,000 per year.

Shed walls can also prevent patients from using biosimilar drugs – cheaper versions of the expensive biologic drugs that patients with chronic conditions often need. Biosimilars are generally 30% cheaper than their branded competitors, so could offer substantial savings for people like me with psoriatic arthritis and other autoimmune conditions.

For physicians, hitting the discount wall can prevent them from prescribing the drug that is best for our patients. In the long run, I’m concerned that the discount walls will stifle the development of new treatments.

It is crucial to ensure that patients receive the medications prescribed by their doctors, but simply preventing the non-medical change will not solve the problem. If we are to prevent patients from suffering from higher drug costs and poor health, Ohio officials should investigate these discount deals and ensure that companies compete against each other on the basis of value. ‘a drug benefits patients – not their shareholders.

Dr. Nicole M. Johnson is a pediatrician practicing in Ohio.

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