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

Severe Price Increases and Secret "Fee" 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

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 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

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