Driving Factors

For the Pharm & Health Insurer/PBM Price Collusion Scheme

  1. Closely-Guarded Pharma/PBM Secrecy and Lack of Transparency:
    • 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.
  1. Medicare Part D:
  1. 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 
  • WHY THE SEISMIC AND SECRET SHIFT TO “PHARMA FEES” WITH PART D?
  • 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
  • Severe Concentration in the U.S. Health insurance/PBM Market 
  • 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

 

 

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