Drug rebates in Medicare Part D: Excess patient costs in the case of hepatitis C treatments.

Abstract

Medicare Part D was implemented as a prescription drug benefit in 2006. Since then, high-cost new therapies have emerged, resulting in large increases in prices for pharmaceutical products, share of government spending from pharmaceutical products, and patient out of pocket costs. The objectives of this study were to: 1) evaluate the role of pharmacy benefit managers who are intermediaries in the processing and payment of prescription drug plans, and 2) to analyze the formulary selections of Medicare Part D plans in the context of differing wholesale acquisition costs, list prices and potential rebates, while building on prior work on the out of pocket costs associated with rebates. Hepatitis C was used as a case study to compare the list prices, clinical merits, and preferred drug coverage frequency of select pan-genotypic direct acting agent Hepatitis C treatments. The treatments were then put through a hypothetical 2018 Medicare Part D standard cost structure to illustrate differences in out-of-pocket costs to consumers at various list prices among treatments. Hepatitis C treatments with lower list prices were offered as covered benefit less frequently than high list price treatments, despite being clinically superior and lower out-of-pocket cost. Consumers, regulators and policy advocates need to work to limit the impact of financial conflicts of interest and perverse incentives of pharmaceutical rebates in drug selection. This is especially true for high-cost treatments with substantial out-of-pocket cost implications for consumers, which also prevent widespread access, hindering public health goals.