Secretive 'rebate trap' keeps generic drugs for diabetes and other ills out of reach

[TU Curmudgeon]

From ABC News

Secretive 'rebate trap' keeps generic drugs for diabetes and other ills out of reach
​

Lisa Crook was lucky. She saved $800 last year after her insurance company started covering a new, less expensive insulin called Basaglar that was virtually identical to the brand she had used for years.

The list price for Lantus, a long-acting insulin made by Sanofi that she injected once a day, had nearly quadrupled over a decade.

With Basaglar, “I’ve never had my insulin cost drop so significantly,” said Crook, a legal assistant in Dallas who has Type 1 diabetes.

But many people with diabetes can’t get the deal Crook got. In a practice that policy experts say smothers competition and keeps prices high, drug companies routinely make hidden pacts with middlemen that effectively block patients from getting cheaper generic medicines.

Such agreements “make it difficult for generics to compete or know what they’re competing against,” said Stacie Dusetzina, an associate professor of health policy at Vanderbilt University School of Medicine.

COMMENT:-

Somehow I can't quite follow the logic involved when [a] the actual price paid to the drug companies go down (subtract the rebate [which increases from year to year] from the list price [which increases from year to year]) while the cost to the consumer goes up (add the markup [which increases from year to year] to the list price [which increases from year to year]).
​

 

[Hatuey]

Yes, we know pharmaceutical companies in America work like cartels. They pay off the government, and they threaten or buy off middle management.

The solution isn't to let them do more of this without the government taking notice. The solution is for our laws to cap their profits, and give the extra back to their patients. Id cap it at 70% of their current profit levels.

Anything past that, they can survive without. You know if the CFO or some nerdy lab tech doesn't like it, they can rake leafs or do plumbing to make up for lost income.


Sent from Trump Plaza's basement using Putin's MacBook.

 

[DaveFagan]

From ABC News

Secretive 'rebate trap' keeps generic drugs for diabetes and other ills out of reach
​

Lisa Crook was lucky. She saved $800 last year after her insurance company started covering a new, less expensive insulin called Basaglar that was virtually identical to the brand she had used for years.

The list price for Lantus, a long-acting insulin made by Sanofi that she injected once a day, had nearly quadrupled over a decade.

With Basaglar, “I’ve never had my insulin cost drop so significantly,” said Crook, a legal assistant in Dallas who has Type 1 diabetes.

But many people with diabetes can’t get the deal Crook got. In a practice that policy experts say smothers competition and keeps prices high, drug companies routinely make hidden pacts with middlemen that effectively block patients from getting cheaper generic medicines.

Such agreements “make it difficult for generics to compete or know what they’re competing against,” said Stacie Dusetzina, an associate professor of health policy at Vanderbilt University School of Medicine.

COMMENT:-

Somehow I can't quite follow the logic involved when [a] the actual price paid to the drug companies go down (subtract the rebate [which increases from year to year] from the list price [which increases from year to year]) while the cost to the consumer goes up (add the markup [which increases from year to year] to the list price [which increases from year to year]).
​

Just to reinforce another post. One must give significant weitght to CORPORATE greed as the prime moving mantra in USA Big Pharma. The PATIENT be damned!
/

 

[JasperL]

Yes, we know pharmaceutical companies in America work like cartels. They pay off the government, and they threaten or buy off middle management.

The solution isn't to let them do more of this without the government taking notice. The solution is for our laws to cap their profits, and give the extra back to their patients. Id cap it at 70% of their current profit levels.

Anything past that, they can survive without. You know if the CFO or some nerdy lab tech doesn't like it, they can rake leafs or do plumbing to make up for lost income.

The problem is "Profits" is a pretty vague concept, and you can't really cap an industry's profits like that. Company A might run on losses or tiny profits for a decade, get their revolutionary blockbuster to market and start making serious money, and helping people. That's OK - that's why they run for a decade with no profits, working on drugs with big potential. So do you average the decade of losses into the new year? It's an impossible task to write rules to do, IMO, and not either have really terrible results or insert so many loopholes so as to defeat the purpose.

What we want to do, in this narrow case, is allow generics a fair playing field, which if they have it will be FAR preferred by insurers and patients to branded drugs costing 10 times the generic. At any rate, the problem can likely be fixed with some sunlight on pricing and rebates, or at least partially addressed. We could start there.

 

[Hatuey]

The problem is "Profits" is a pretty vague concept, and you can't really cap an industry's profits like that. Company A might run on losses or tiny profits for a decade, get their revolutionary blockbuster to market and start making serious money, and helping people. That's OK - that's why they run for a decade with no profits, working on drugs with big potential. So do you average the decade of losses into the new year? It's an impossible task to write rules to do, IMO, and not either have really terrible results or insert so many loopholes so as to defeat the purpose.

What we want to do, in this narrow case, is allow generics a fair playing field, which if they have it will be FAR preferred by insurers and patients to branded drugs costing 10 times the generic. At any rate, the problem can likely be fixed with some sunlight on pricing and rebates, or at least partially addressed. We could start there.

Sure, but I'm not talking about some no-name company making some obscure drug. I'm talking about companies who are directly behind legislation and can afford million dollar lobbying contracts because they stand to make billions.

Sent from Trump Plaza's basement using Putin's MacBook.

 

[Greenbeard]

To some degree, this is just what negotiating via bulk purchasing is. The logic is the same whether it's some PBM today or Medicare someday down the road: I've got a bunch of customers and will negotiate inclusion and placement on my formulary in exchange for discounts. Maybe there's too many steps in the supply chain today, maybe rebates aren't the best way to realize discounts, I don't know. But if by giving a brand name drug favored placement on my formulary and excluding the competing generic I can bring down the price of the brand name to at or below that of the generic, I imagine I'd do it. The real issue there seems to be in ensuring that the savings are sufficiently shared among those with skin in the game, including the end consumer, whose cost-sharing responsibilities should reflect the negotiated price.

 

[JasperL]

Sure, but I'm not talking about some no-name company making some obscure drug. I'm talking about companies who are directly behind legislation and can afford million dollar lobbying contracts because they stand to make billions.

I agree with your concerns and the villains here, it's just that capping "profits" for a company or an industry is really difficult and IMO can't be done coherently as a matter of law. Just too many variables and what we want the drug companies to do is create great, profitable drugs that improve outcomes. That might make them huge profits, but we at least sometimes WANT that outcome, to incentivize research.

What we don't want are efforts to bribe PBMs and kill off or bury cheaper alternatives, or for them to hide the impact of quadrupling prices with rebates and other forms of legalized bribery and then shift the costs to consumers who can't see the deals and can't impact the prices.

The extreme secrecy of these contracts, and that's something I read time and again, tells you that everyone NOT KNOWING the deals is key to them surviving, so let's undo that. Subject these arrangements to scrutiny, some sunlight, by consumers and/or regulators.

 

[AliHajiSheik]

These drugs would become so much more cost effective if the government permitted bringing the drugs in from other countries. Lantus in France is a lot cheaper not because it is a generic, but because it is the same drug in another country.

Airlines could have drug store prices for those flying just to get medication helping to get rid of excess capacity. I'm not a fan of government dictating pricing, but I'm also not a fan of government means of propping up those same prices.

 

[Lord Tammerlain]

These drugs would become so much more cost effective if the government permitted bringing the drugs in from other countries. Lantus in France is a lot cheaper not because it is a generic, but because it is the same drug in another country.

Airlines could have drug store prices for those flying just to get medication helping to get rid of excess capacity. I'm not a fan of government dictating pricing, but I'm also not a fan of government means of propping up those same prices.

I would suggest making kickbacks, rebates, gifts, "information/training trips" illegal for drug companies to provide in any way to doctors, pharmacies, hospitals. I would also require any prescription written by a doctor to include a generic version of the drug (if it exists)

 

[TU Curmudgeon]

I would suggest making kickbacks, rebates, gifts, "information/training trips" illegal for drug companies to provide in any way to doctors, pharmacies, hospitals. I would also require any prescription written by a doctor to include a generic version of the drug (if it exists)

I live in BC and the regulations here require the pharmacies to offer the generic version whenever a doctor proscribes a "brand name" version. This is because BC has a "universal pharmacare program".

Just for fun, THIS LINK will show you what your medication costs could be if you were covered under the program (there is no monthly/annual premium to pay) - the amount that calculations are based on is "Net Income" (which can be higher or lower than "taxable income", but which, for most people, will be the same as "taxable income"). How does that compare with "your" costs"?

 

[Lord Tammerlain]

In Alberta drugs are not covered by AHC but my company health plan covers most. My previous job had a 5 dollar co pay on drugs not sure what my current company has

 

[TU Curmudgeon]

In Alberta drugs are not covered by AHC but my company health plan covers most. My previous job had a 5 dollar co pay on drugs not sure what my current company has

One thing that most insurance companies understand is that the BEST way to keep the government out of the insurance market is to keep their rates low enough that it isn't cost effective to set up a government program.