When someone else pays, Rx costs soar

September 7, 2016

Why are Rx drugs so expensive? No one seems to have a good answer.

Why are prescription drugs so expensive? It seems there’s no one answer to this question. Even in an election year, the major presidential candidates seem unwilling to even bring up the subject.

Editor’s Choice: Health Mart, Publix pharmacies top pharmacy rankings

Bert BrachtmanGeneric drug prices began to skyrocket when executives figured out that if you buy another company’s product line, and that line includes a drug no one else sells, you can then legally charge whatever you want. You become a monopoly. We may not like Martin Shkreli, but I suspect his conduct with pricing Daraprim will be determined legal, simply not ethical.

That was just one example of outrageous increases in prices of generic drugs. Other examples include generic Librax, Doxycycline, Pravastatin, Donnatal, Digoxin, and virtually every topical available, with an emphasis on anything ending in “azole”

Drug costs are directly tied to the expansion of the insurance industry into the process of consumers receiving prescriptions after they’ve been prescribed.

I started out many years ago as a stock and delivery boy in a local drugstore. I watched customers pick up prescriptions and pay for them. Those who were on public assistance had a different method of paying, but nobody went without needed medications. As welfare expanded, insurance companies became very involved, and something called third parties entered the scene.  

Then, with so many people not paying directly for their prescriptions, the opportunity for companies to charge more materialized, and customers were suddenly caught between a rock and the proverbial hard place. Manufacturers raced to increase costs since the consumer was no longer the payer--it was the government, the union or, in some cases, private coverage.

At the same time, the industry started producing NEW drugs--not simply combinations of older ones--that seemed to change the industry. Cures for certain illness, once thought impossible to treat, suddenly seemed to be within reach.

 

PBMs entered the scene sometime during this series of events. They serve as real third parties who are paid to manage the prescription area of the insurance industry for a fee, and actually negotiate better prices for clients and insurance companies. They also decide how much they will pay the retail pharmacists. Sometimes, their reimbursements are totally out of line with what the pharmacists are paying for the drugs they dispense.   

The distance between the manufacturer and the local pharmacist/customer is now even wider and more pronounced as manufacturers are now looking for the “specialty pharmacies” to handle the coverage of their new and more-expensive prescription drugs.  

Politicians, who are really ignorant of the value the new drugs bring, are quick to attack the industry, but have no answers on how to pay for the high costs of developing new drugs. The insurance companies are more interested in their bottom line for their shareholders, even willing to publicly say they will not cover certain drugs regardless of their value to the consumer.   

There are so many middle men now between the manufacturer and the patient. Perhaps, we should explore eliminating some of the middlemen to bring prices down.  Always remember, when somebody else does the paying, there’s no incentive for reducing costs.