Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Behind the EpiPen Pricing Scandal: Why Generics Don’t Necessarily Reduce Prices – Mish Proposals

Courtesy of Mish.

Despite widespread availability of generic versions, customers do not often use them. Why?

In some cases, pharmacies are under obligation to not mention cheaper alternatives. Some pharmacists may not be aware of cheaper alternatives because they do not know what a plan covers.

And behind the scenes, there is the complex role of middleman pharmacy-benefit managers (PBMs), who take a cut out of sales and collude with drug makers to keep prices high.

Please consider Behind the Push to Keep Higher-Priced EpiPen in Consumers’ Hands.

Something strange happened when Alice Bers went to the pharmacy earlier this year to fill her son’s EpiPen prescription: The doctor had prescribed the generic, but it would have cost her more out-of-pocket than the branded version.

So the pharmacy asked her son’s doctor for a prescription for the brand-name EpiPen, and her health plan got a bill for $438.53, or $227.52 more than the generic would have cost it. Many EpiPen customers, from a range of different health plans, have wound up getting the more expensive brand.

“I couldn’t believe how crazy our system is that it cost us less to get the brand name, while of course it cost our insurer more,” Ms. Bers said.

One reason, according to multiple people familiar with the drug industry, is that a middleman can profit from the sale of pricier medicines, such as EpiPen.

“The complexity in the system and lack of the right information available to buyers at the right time costs the country billions of dollars, unnecessarily,” said Michael Rea, chief of executive of Rx Savings Solutions, which sells software to help patients and their employers choose the least-expensive medicines.

When Ms. Bers picked up an EpiPen two-pack in March, several companies beyond the drugmaker Mylan were involved in filling the prescription. These middlemen warehoused, shipped and handed over the drug. Overseeing it all was a pharmacy-benefit manager, or PBM.

Each was paid for their involvement. For a typical brand-name drug listing for $300, middlemen generally receive more than $37 in gross profit, according to Adam Fein, president of Pembroke Consulting, which advises drug companies on the drug-distribution chain. A PBM gets the biggest share, $18.

PBMs typically don’t reveal the rebates they negotiate even to their health insurer and employer clients.

Drugmakers and others in the industry also say that PBMs can profit from costlier drugs because that means bigger rebates. “Their incentives align more to a higher gross price and a higher discount than to truly reducing the cost to everyone involved, so there are questions whether they are actually driving lower cost,” said Howard Deutsch, who advises drugmakers on working with companies involved in the drug-supply chain at ZS Associates.

Some PBM contracts prevent pharmacists from telling patients a drug’s true cost or whether an alternative might be cheaper for them, said Kevin Schulman, a Duke University professor of medicine who has written about the intermediaries.

When Erin Morrow, of Franconia, Pa., went to a local CVS pharmacy to pick up a prescription for her young son in April, she said she didn’t know about the Mylan generic and the pharmacist didn’t tell her one was available. Her plan paid $357.04 for the EpiPen Jr. two-pack. Later, a “health advocate” working for her employer told her that she could have gotten the generic, which would have cost her plan $81.54. Ms. Morrow said her health plan began limiting the coverage to Mylan’s generic and a rival product, starting July 1.

Consumers like Ms. Bers, a lawyer from Longmeadow, Mass., say a number of factors in the complicated health-care system seem to push them to the costliest version.

Ms. Bers’s drug plan—administered by the PBM Express Scripts—has no incentive to favor the cheaper generic version of EpiPen over the brand name. Her copay is the same either way—$30.

When she went to the local CVS pharmacy in March to replace a two-pack for her 17-year-old son that had expired, she wanted to use a coupon from Mylan to cover the copay. But the pharmacist said she couldn’t use it for the generic, she says. She says the pharmacy never told her that Mylan also offered copay help for its generic.

Ms. Bers says she learned later, by looking on the websites of Express Scripts and her Blue Cross Blue Shield of Massachusetts health insurer, how much more the brand-name EpiPens cost her health plan.

People familiar with the industry say Express Scripts, the PBM, could have made more from the sale of brand-name EpiPen depending on the amount of the rebate and other concessions it may have won from Mylan, and what it passed along to Ms. Bers’s health insurer.

Rotten to the Core

What applies to EpiPen applies across the board. Collusion, nondisclosure agreements, and government laws that do not allow cheap drug imports all act to keep prices higher in the US than anywhere else in the world.

Consider this snip from the article:

“When Erin Morrow, of Franconia, Pa., went to a local CVS pharmacy to pick up a prescription for her young son in April, she said she didn’t know about the Mylan generic and the pharmacist didn’t tell her one was available. Her plan paid $357.04 for the EpiPen Jr. two-pack. Later, a “health advocate” working for her employer told her that she could have gotten the generic, which would have cost her plan $81.54. Ms. Morrow said her health plan began limiting the coverage to Mylan’s generic and a rival product, starting July 1“.


Continue reading here…


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a FREE Daily News membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!