Medicare Part D: Pharma/PBM Price Collusion from the Start

Skyrocketing U.S brand drug price increases in Medicare Part D as soon as the program began in January 2006

• • Systemic 30% Part D brand drug prices increases in just its first few years, especially for high-cost "specialty" MS, cancer and rheumatoid arthritis drugs
  • Surging corporate profits for both pharma and PBMs driven by the severe systemic U.S. brand drug price increases

 Counter to Government expectations, Medicare Part D "manufacturer rebates" were very low from the start of the program

• • Only about 10% overall in the Part D program in its first 10 years
  • Very low rebates on extreme-priced "specialty" drugs, despite severe price increases
  • Minimal or no Part D rebates on high-cost cancer drugs, despite their high use with senior citizens
  • A July 2019 Government report regarding Medicare Part D noted that manufacturers provided virtually NO rebates on 64% of brand drugs in the program in 2016
  • Link to the June 2019 MEDPac report, see page 33

Further, counter to Government expectations, the dominant health insurer/PBMs have kept virtually NO "manufacturer rebates" as profits in Part D since the start of the program

• • Before Part D, the PBM share of "manufacturer rebates" were their main source of profits from brand drugs
  • Congress expected the PBMs' share of "rebates" negotiated on behalf of beneficiaries to also be their main source of Part D profits
  • However, in Part D, PBMs have kept a minimal portion of manufacturer rebates since the start of the program
    • As per Government reports, PBMs kept less than 1% of manufacturer brand drug rebates Medicare Part D in 2008 and 2016
    • Link to the July 2019 General Accounting Office (GAO) report, documenting minimal 2016 Part D "manufacturer rebates" kept by PBMs, see page 16

In reality, at start of Medicare Part D, the pharma/PBM partners secretly switched to the new "pharma fee" model, tied to brand drug "sticker" prices to maximize BOTH their profits

• • Other than "rebates", "pharma fees" are the ONLY other way for PBMs to make large profits on U.S. brand drugs in Medicare Part D and the U.S. private health insurance market
  • Health insurer/PBMs routinely keep ALL "pharma fees", while passing small or modest rebates (if there are any) on to patients and clients

MASSIVE PHARMA AND HEALTH INSURER/PBM PROFITS WHILE CAUSING SEVERE PUBLIC HARM

• • Massive profits for both pharma and health insurer/PBMs driven by the severe U.S. price increases and linked "pharma fees" (paid as a percent of the rising "sticker" prices)
  • The accelerating drug costs are passed on to U.S. patients, families, taxpayers, unions, businesses and other health insurer/PBM clients

• Link to the Whistleblower Complaint discussion of 2010-2011 Government reports documenting these disturbing Medicare Part D pricing and rebate trends from the start  of the program