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
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- 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
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- 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
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- 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
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- 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
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- 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