Asbury Park Press: The True Driver for High Cost of Medicines

May 20, 2022 | Debbie Hart

America’s thriving life sciences industry has enabled new and innovative drugs to come to market, promising a better quality of life for people in New Jersey and around the world. Recent conversations in Washington, and even in the New Jersey State Legislature, have continued to focus on the “high prices” of many of these drugs – often blaming the biopharmaceutical manufacturers. While policymakers rightly focus their attention on the rising high out-of-pocket costs of drugs, they ignore the true culprits … industry middlemen.

While it may make for an easy talking point, the innovative biopharmaceutical manufacturers leading the way to breakthroughs on treatments for devastating diseases like cancer and Alzheimer’s are not the cause of out-of-pocket price increases for prescriptions – and the data backs this up.

Patient out-of-pocket costs skyrocketed by a staggering $1 billion in aggregate in 2020. In contrast, U.S. spending on medicines increased by just 0.8 percent in 2020 and net prices for brand medicines increased under the rate of inflation for the past five years.

This data not only recognizes the struggle of millions of Americans whose wallets are strained by the cost of their prescriptions, but also clearly demonstrates that the fault does not lie with America’s life sciences and biopharmaceutical companies.

In 2020, biopharmaceutical companies provided $187 billion in total discounts, rebates and other price concessions to middlemen known as Pharmacy Benefit Managers (PBMs) and health plans. Patients too often DO NOT benefit from these rebates and discounts when they go to the pharmacy. In fact, nearly 50 cents of every $1 spent on brand medicines went to middlemen and payers, not to the patients who were forced to pay the full price or the biopharmaceutical company that developed and manufactured the medicine. 

These practices have concerning consequences for patients, their pocketbooks and, ultimately, their health outcomes.

PBM practices that drive up treatment costs can cause patients to leave the pharmacy counter without the medicines they came to get – worsening their quality of life and threatening their health outcomes. When out-of-pocket costs for treatments rise to more than $250, 70% of patients abandon their prescriptions at the pharmacy. In 2020, patients starting a new therapy abandoned 55 million prescriptions at pharmacies – and this is likely to increase as patient out-of-pocket costs continue to rise.

A recent congressional forum looked at the role PBMs play in determining what patients pay out-of-pocket for prescription medicines. The forum provided an important reminder of how these middlemen operate in an opaque system that often leaves patients paying far more than they should for medicines. With the top three insurers’ PBMs controlling nearly 80% of the prescription drug market, it is imperative that these “industry middlemen” use fair practices that do not threaten patient access or impede efforts to improve health equity.

Now consider this…Average price of goods rose seven percent between December 2020 and December 2021, the largest percent change over a 12-month period since 1981. Residents of New Jersey and Americans across the country continue to struggle to afford rising prices at the gas pump, the grocery store and the pharmacy counter. While drug prices experienced zero inflation in 2021, patients still felt the strain of rising prices as industry middlemen profited off of rebates without rightly passing those savings on to patients. It just doesn’t add up.

BioNJ, the life sciences trade association for New Jersey with a network of research-based life sciences companies and stakeholders, fully supports lowering out-of-pocket costs and making medicines more affordable. However, these efforts cannot come at the cost of enacting flawed legislation that would have a devastating impact on future innovation for treatments that would improve quality of life and health outcomes for patients.

For years, policymakers have put a focus on drug pricing reforms. If they really want to make a difference for patients, they must address patient out-of-pocket costs and “industry middlemen” practices that take advantage of patients who cannot live without their prescription medications.

Debbie Hart, President and CEO, BioNJ – The life sciences trade association for New Jersey.