Prescription drug prices are a concern to almost everyone and that concern has captured the attention of policymakers. This is certainly true, many Medicare enrollees who have seen high out-of-pocket costs, particularly for specialty drugs.
The first step in tackling the question of how to keep drug costs down is to know how drug pricing works. Here’s a start:
Drug prices start with pharmaceutical companies. Pharmaceutical companies set prices for their products independently and can increase them at will. This often results in high out-of-pocket costs for consumers, as well as increased costs throughout the entire system.
Medicare Advantage-Part D (MAPD) plans and standalone Part D Prescription Drug Plans (PDPs)work to deliver value for seniors and for taxpayers by negotiating lower prices directly with pharmaceutical companies. They are able to do this by working with Pharmacy Benefits Managers (PBMs), such as CVS Caremark or Express Scripts, who are able to negotiate lower drug prices with pharmaceutical companies through the use of rebates.
Rebates are a vital tool used by health plans to lower drug premiums for their beneficiariess. Without the use of rebates, health plans would have no leverage to negotiate lower drug prices with pharmaceutical companies, resulting in increased premiums for health plan enrollees.Consumers are also able to change plans each year to better meet specific financial and health needs to help manage the prescription drug costs, should their medical or financial needs change over time.
The prescription drug supply chain needs comprehensive reform to protect seniors and those with disabilities on Medicare from high prices, abrupt increases, as well as rising drug costs in both routine medications and specialty prescription drugs. As beneficiaries, you can contact your representatives to motivate legislative change and you can share your stories to better build a case when we advocate for the stability of drug prices for our 400,000 advocates.