Driving Factors

For the Pharm & Health Insurer/PBM Price Collusion Scheme

- Minimal disclosure of pharma & health insurer/PBM financial ties, contracts and transactions.
- Allows BOTH pharma and health insurers/PBMs to make wide-ranging false and hard to verify public claims.
  - Enables the pharma/PBM "blame" and deflection game
- Has enabled these "partners" to their "fee" pricing scheme for the 15 years since it began with Medicare Part D.
Medicare Part D:

The primary revenue/profit growth driver for pharma AND the dominant health insurer/PBMs over the past decade-plus

BEFORE Part D: ALMOST ALL health Insurer/PBM brand drug profits from negotiating “rebates” (i.e., discounts) from pharma for patients and clients
- Health insurers kept a share of “rebates” for lower drug prices

AFTER Part D: ALMOST ALL health Insurer/PBM brand drug profits from secret “pharma fees” directly tied to massive U.S. prices and price increases.
- “Manufacturer rebates” now account for LESS THAN 10% of health insurer/PBM profits, while deceitfully remaining their main focus of public discussion

Part D “Manufacturer Rebates”: FULLY DISCLOSED
- Health insurers/PBMs MUST pass on most rebates to Part D beneficiaries and taxpayers
- “Manufacturer Rebates” lead to LOWER Part D brand drug prices and pharma profits

Part D “Pharma Fees”: LITTLE DISCLOSURE
- Health insurer/PBMs secretly KEEP Virtually ALL Part

“Pharma fees”

“Pharma fees” EXCLUDED from Part D drug prices
“Pharma Fees” lead to HIGHER pharma AND health insurer/PBM profits, with higher Part D drug costs passed on to patients and taxpayers.
VAST ABUSE AND PUBLIC HARM WHEN SECRET “PHARMA FEES” TO HEALTH INSURERS/PBMS DRIVEN ONLY BY MASSIVE 5-TO-10-FOLD BRAND DRUG PRICE INCREASES, AS HAS BEEN ROUTINE
- NOT for legitimate health insurer/PBM “support” work as required by law.
- KICKBACKS PAID JUST FOR PRICE INCREASES

Medicare Part D Shortfalls
- Limited government Part D oversight
  - Especially regarding “Pharma fees” to health insurer/PBMs
- No Part D taxpayer protections on brand drug price increase, as with other federal drug programs
  - In Medicaid, after drug approval annual price increases limited to inflation rate (CPI); only 2-3% for past decade
  - Many “old” U.S. blockbuster brand drugs now 80-90% cheaper in Medicaid compared to Part D

Widespread U.S. Pharma Patent Expirations as Part D Began
2006: Brand drug Rxs 50% of U.S. market
2018: Brand drugs Rxs now less than 10% of U.S. market
FAR LESS legitimate “Manufacturer rebate” profit opportunity for the dominant health insurer/PBMs in BOTH Part D and the private health insurance market

Pharma suddenly became dependent upon a few major remaining U.S. brand drug categories
- Insulin/diabetes, cancer, multiple sclerosis, rheumatoid arthritis, orphan drugs
- BUT “OLD” BLOCKBUSTERS IN THESE CATEGORIES FACED SEVERE COMPETITION
- NO SURPRISE THAT THESE “OLD” DECLINING “BLOCKBUSTERS” HAVE BEEN WHERE THE GREATEST PRICING ABUSE HAS OCCURRED, DRIVEN BY THE SECRET “PHARM FEE” SCHEME
  - Main targets of my two whistleblower cases

Relentless mergers and acquisitions over the past several decades
- Of health insurers, PBMs and “specialty” drug pharmacies
- Few even challenged by the Federal Trade Commission (FTC) and/or the Antitrust Division of the Department of Justice (DOJ)

Now just 4 dominant health insurers/PBMs control 80-90% of the U.S. drug benefit market, including Medicare Part D

After recent Cigna/Express Scripts and CVS/Aetna mergers
- Even greater secrecy and concentration
- No mention of U.S. brand drug prices in the recent DOJ approval of the CVS/Aetna merger

Virtually uniform and massive brand drug price inflation across the United States over the past decade-plus
- In ALL Medicare Part D and private health insurance plans

Ongoing and accelerating decimation of independent pharmacies across the nation by the dominant health insurer/PBMs