Americans pay twice as much for prescription drugs as the rest of the world, and stakeholders discussed efforts to curb rising costs at the 2024 Michigan State of Reform Health Policy Conference this month.
Michigan Association of Health Plans Executive Director Dominick Pallone said the association represents 11 health insurance companies in the state, which cover more than three million residents who are predominantly Medicaid members.
“As we address cost affordability and access, we’re trying to find balance in the pharmaceutical world,” Pallone said. “It’s becoming increasingly more difficult for our members to find that balance. We have scenarios where employers are seeing their costs rise, and they’re asking plans to shift costs to their employees. Now those costs continue to rise, and shift more costs to employees.”
Pallone discussed the state’s Medicaid market, where patients are generally issued small copays.
“Primarily what we’re seeing from that Medicaid side is a unit cost trend for ingredient costs continuing to skyrocket at a very alarming rate,” he said. “At the current rate, it’s unsustainable. It’s hard to talk about healthcare and health policy without talking about pharmacy spending, drug costs, affordability, and access.”
Rep. Alabas Farhat (D-Dearborn) said prescription drug cost reform is one of the most common topics of conversation lawmakers have with constituents.
“We have hundreds of bills trying to come at it from different angles. When we talk about healthcare costs, you have to realize that ingredient/drug pricing is an outsized share of the reason healthcare costs (continue) to rise. How can we study these drugs and hold drug manufacturers accountable towards their list price? When we go into this space, we have to be careful to avoid pitfalls that can unintendedly force prices upwards. We have to be OK with competition in the market, (and) with insurers negotiating the best price they can actually get.”
— Farhat
Panelists discussed the impact pharmacy benefit managers (PBMs) have on prescription drug costs. Michigan Pharmacists Association Director of Government Affairs Dr. Eric Roath noted that the PBM Licensure and Regulation Act went into effect on Jan. 1. The act provides new licensing obligations and regulatory standards for Michigan PBMs.
“Provisions (of it) go into how they treat pharmacies when it comes to reimbursement,” Roath said. “These are patient protective as well. The act says that after a drug has been dispensed, you can no longer change that (price). The patient should not be responsible for more than the final reimbursement received by the pharmacy. We’ve taken a step in the right direction with this act. However, we also need to be making sure that the provisions in there are enforced.
Now that we have the correct policy on the books, it’s just a matter of making sure the patient actually sees the benefit of (it). It’s a misconception to think that some of the problematic behaviors of PBMs are just a pharmacy problem. It is very much a patient cost problem.”
Pallone said the PBM law created a great deal of transparency that did not previously exist.
“This is one of the remaining areas we just don’t feel there’s a lot of transparency on. Our industry, from an insurance perspective, (is) very highly regulated; quarterly financial reports are filed, (and) margins are shown. These (PBM) trends, even after rebates, are alarming to us.”
— Pallone
Michael Cabonargi, regional director of the U.S. Department of Health & Human Services’ Great Lakes Region—which includes Michigan, Ohio, Indiana, Wisconsin, Minnesota, and Illinois—noted that components of the Inflation Reduction Act will help lower prescription drug costs as well.
“The act put a cost control in for a $35 a month cap on the price of insulin for Medicare seniors,” Cabonargi said. “What it means is 673,000 Michigan seniors are going to be saving an average of $356 a year for prescription drug costs. That’s cost control because of insulin and [the ability to] negotiate with drug companies. Because Congress gave us the authority with the act, for the first time, to direct negotiations with pharmaceutical companies for the most expensive, most prescribed drugs through Medicare.
The (U.S. Department of Veterans Affairs), for example, has had the ability to negotiate for price control for veterans. It was never for everyone under Medicare or Medicaid. We’re hopeful that once these first 10 drugs’ pricing starts to hit seniors’ pocketbooks, people will start to realize it’s in their best interest. The act also eliminates out-of-pocket expenses and copays for drugs that doctors say seniors should have, (like) shingles. Shingles is a two-shot regimine. It’s $300 per shot.”