Abstract
Over the past decade, branded prescription drug manufacturers have substantially increased list prices while offering larger rebate payments to health care insurers. Whereas larger rebates can partially offset increases in list prices for insurers, patient out-of-pocket costs may be directly associated with list prices for individuals without insurance and indirectly associated with list prices for individuals with insurance through deductibles or coinsurance. To investigate the association between rebates and patient out-of-pocket costs and whether this association differs by coverage type (ie, Medicare, commercial, or uninsured) and before and after 2014. This cross-sectional study was conducted using data from the Medical Expenditure Panel Survey (MEPS) combined with pricing data for single-source branded drugs from SSR Health from 2007 through 2018. The study was conducted among a nationally representative sample of the noninstitutionalized civilian US population. Included individuals were respondents to MEPS with at least 1 prescription for a single-source branded drug who were covered by Medicare or commercial insurance or were uninsured during an entire year. Data analyses were conducted from August 2019 through March 2021. Estimated rebate size. Out-of-pocket costs per prescription were calculated, adjusting for year and drug. Among 38 131 individuals with at least 1 prescription, the mean age was 54 years (95% CI, 54 to 55 years), with 22 044 women (57.8%) and 29 086 White individuals (76.3%). The sample included 444 unique drugs with a survey-weighted total of 4.7 billion prescriptions. Estimated mean (SE) rebates increased from $34 ($1) per prescription in 2007 to $374 ($9) per prescription in 2018. The rebate sizes were associated with statistically significant mean out-of-pocket increases per branded prescription of $4 (95% CI, $4 to $4) from 2007 to 2013 and $11 (95% CI, $10 to $12) from 2014 to 2018. From 2014 to 2018, rebate sizes were associated with statistically significant mean increases in out-of-pocket costs per prescription of $13 (95% CI, $12 to $13) for individuals with Medicare, $6 (95% CI, $6 to $7) for individuals with commercial insurance, and $39 (95% CI, $34 to $44) for individuals without insurance. After adjusting for list prices, there was no association between rebates and out-of-pocket costs, with a change from 2014 to 2018 of -$0.01 (95% CI, -$0.04 to $0.02). These findings suggest that drug manufacturers may have provided larger rebates to insurers primarily by increasing list prices and that individuals without insurance had greater cost increases. The results emphasize the need for policy solutions that decouple list prices and out-of-pocket costs.
Highlights
Controlling prescription drug spending is a national priority for the public,[1] health care insurers,[2] and governments.[3]
After adjusting for list prices, there was no association between rebates and out-of-pocket costs, with a change from 2014 to 2018 of −$0.01
These findings suggest that drug manufacturers may have provided larger rebates to insurers primarily by increasing list prices and that individuals without
Summary
Controlling prescription drug spending is a national priority for the public,[1] health care insurers,[2] and governments.[3] One way that insurers attempt to slow drug spending growth is by contracting with pharmacy benefit managers (PBMs), who negotiate drug prices on behalf of multiple insurers These companies negotiate discounts on list prices from drug manufacturers in the form of rebates in exchange for providing favorable insurance coverage. Medicare Part D collected $24 billion in rebates in 2018.4 PBMs can keep a portion of the rebates, so stakeholders, including the US Department of Health and Human Services, have raised concerns that manufacturers may increase list prices to offer larger rebates to PBMs.[5,6] list prices for branded drugs increased by 159% from 2007 to 2018.7
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