Aug 15, 2019

Pharmacy benefit managers pass along a lot of Medicare rebates

Photo: Paul Linse/Getty Images

Pharmacy benefit managers negotiated $18 billion worth of rebates from drug manufacturers within Medicare’s prescription drug program in 2016, and they retained less than 1% of those rebates for themselves, according to a new Government Accountability Office report.

The big picture: This isn’t surprising, as Medicare is structured so that PBMs pass pretty much all rebates back to the federal government. While the GAO report offers a good base of how middlemen affect drug prices in Medicare, it does not fully address larger issues.

These include: 

  • PBMs do keep rebates in commercial plans. Those commercial rebates are most important and highly variable, and they're are hidden within a black box, which Bloomberg started to expose in 2016.
  • PBMs extract payments from drug companies that are not technically rebates — things like inflation payments, prompt payment discounts and many more — but they act a lot like rebates. The GAO only made a passing reference to “bona fide service fees.” 
  • The GAO acknowledges the contracts it reviewed “are not generalizable to all service agreements that are in effect,” and many agreements omitted important information because PBMs or health insurers viewed it as proprietary.

Go deeper: How Express Scripts claws back money from almost all pharmacies in Medicare

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Nancy Pelosi's drug price plan would take on Big Pharma

Illustration: Aïda Amer/Axios

A draft of House Speaker Nancy Pelosi's drug pricing plan obtained by Bloomberg Law confirms that she's working on an aggressive proposal that would give the government vast new authority.

Between the lines: The proposal would give Medicare the authority to negotiate the prices of 250 drugs, limit how high these prices could be based on how much other countries pay, and establish harsh penalties for drugmakers who refuse to comply.

Go deeperArrowSep 10, 2019

The war over Medicare Advantage audits heats up

A doctor visits an older adult at his home. Photo: Mel Melcon/Los Angeles Times via Getty Images

The health insurance industry again is attacking federal proposals that would more aggressively audit Medicare Advantage claims for improper coding — audits that would save taxpayers upwards of $4.5 billion over the next decade.

The big picture: Medicare Advantage is the growth engine of the insurance industry, which has successfully delayed changes and neutered audits.

Go deeperArrowSep 3, 2019

Trump's shrinking health care legacy

Photo: Alex Wong/Getty Images

President Trump came into office in 2017 with big ambitions on health care. But he’ll end this term with a lot less to show.

The big picture: If Trump ends up being a one-term president — and that’s not a prediction, just 1 of the 2 possibilities in 2020 — his health care legacy would be pretty modest.

Go deeperArrowAug 20, 2019