Drug Price Controls Backfire

Summary

A new tracker reveals that drug price controls under the Inflation Reduction Act are increasing out-of-pocket costs for Medicare patients. This contradicts the intended purpose of the controls and raises concerns about the rebate system in the pharmaceutical market. Experts suggest that policymakers need to re-evaluate their approach to drug pricing.

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** Main Story**

Drug Price Controls Increase Costs for Medicare Patients

The Pioneer Institute launched a new data tool, the IRA Medicare Drug Access Tracker, to monitor the impact of drug price controls implemented under the Inflation Reduction Act (IRA). The initial findings are startling: out-of-pocket expenses for Medicare beneficiaries have risen for seven out of nine commonly prescribed medications included in the study. These drugs treat conditions such as heart failure, diabetes, and blood clotting. This outcome directly contradicts the IRA’s aim of lowering drug costs for seniors.

The Rebate System and Its Unintended Consequences

The current pharmaceutical market operates on a rebate system where drug manufacturers provide substantial rebates to pharmacy benefit managers (PBMs). While these rebates help offset costs, they remain hidden from patients. The IRA’s price controls seek to lower a drug’s official “list price.” However, this action also eliminates the rebates manufacturers pay to PBMs.

How PBMs Are Shifting Costs to Patients

PBMs appear to compensate for the loss of these rebates by increasing patient co-pays, co-insurance, and other charges. This cost-shifting effectively negates the intended benefits of the price controls and leaves patients bearing a greater financial burden. The IRA Medicare Drug Access Tracker focuses on Medicare patients served by the four largest PBMs, representing 87% of the market, to assess the real-world impact of these price controls.

Key Findings of the IRA Medicare Drug Access Tracker

• Average Out-of-Pocket Costs Increase: The average out-of-pocket costs for the nine studied drugs have risen by 32%, climbing from $74.51 to $98.42.
• Individual Drug Cost Increases: Seven of the nine drugs experienced individual cost increases, ranging from $10.56 to $316.81.
• Biosimilar Competition: One of the two drugs that did not see a cost increase faced competition from biosimilars, suggesting that market competition may mitigate the impact of price controls.

The Future of Drug Pricing and Affordability

The Pioneer Institute’s findings raise serious questions about the efficacy of current drug price control strategies. Experts argue that a deeper understanding of the pharmaceutical market’s rebate system is crucial for developing effective policies. The IRA Medicare Drug Access Tracker serves as a vital tool for monitoring the evolving situation and informing future policy decisions. Policymakers must address the unintended consequences of price controls to ensure that patients, especially seniors, have access to affordable medications.

New Advances in Diabetes Management

While the rising cost of medications presents a challenge for diabetes management, other advances offer hope for improved care. Continuous glucose monitoring (CGM) systems and insulin pumps have become increasingly sophisticated, providing more precise and personalized treatment. New medications, including GLP-1 receptor agonists and SGLT2 inhibitors, offer improved glycemic control and cardiovascular benefits. Additionally, telehealth and remote patient monitoring are expanding access to diabetes care and education, particularly for individuals in underserved communities. As technology and treatment options continue to evolve, people with diabetes have increasing opportunities to effectively manage their condition and live healthier lives.