Connecticut is becoming a major player in the bioscience industry. In fact, the biopharmaceutical sector added $17.5 billion to the Connecticut economy in 2015 and created a total of 56,204 jobs. As Congress continues to debate changes aimed to lower the cost of prescription drugs, the Chamber of Commerce Eastern Connecticut urges Members of Congress to support plans that also encourage future medical innovation and drug development by preserving access to a range of drug options, so this booming industry can continue to thrive.
One effective way to maintain access but cut out-of-pocket costs for prescription drugs would be to institute changes in how Pharmacy Benefit Managers (PBMs) distribute rebates within the Medicare Part D program. PBMs are the third-party middlemen that negotiate drug prices between insurers and manufacturers.
Right now, that process lacks transparency and rebates routinely offered by drug companies oftentimes are not reflected in the list price we pay at the pharmacy counter. Instead, the discounts go to insurers or the PBMs themselves, increasing costs for end users.
This opaque system not only creates financial burdens for patients, but it can also lead to health complications. Studies have found that almost 50 percent of patients choose to forgo their prescriptions when the out-of-pocket cost is over $200. Nonadherence to treatment can have serious consequences and end up costing the system more when chronic illnesses go unmanaged.
Fortunately, there are multiple proposals under consideration to make PBMs share rebates and discounts with Part D beneficiaries, or at least publicly disclose their rebate distributions. Patients could then use that information to make informed decisions resulting in better health outcomes and cost savings.
While rebate reform aims to lower costs without restricting drug access, the same cannot be said for international reference pricing proposals that would significantly impact Medicare Part B’s payment structure.
Currently, reimbursements for pharmaceuticals covered under Part B are market based, a system that is already successful in keeping costs under control. But some members of Congress and the Administration want to change to a reimbursement system that would base costs on the prices paid by selected foreign governments with socialized health care plans.
These proposals prioritize government savings and ignore the fact that emulating those below-market foreign prices could result in serious access challenges for patients, denying them the use of many cutting-edge drugs, including some used to treat conditions like cancer or rheumatoid arthritis. In fact, the U.S. Department of Health and Human Services analyzed 27 different drugs and found that in 16 foreign countries – many of which will be used for Part B cost determinations – only 11 of the medications were available to patients. In contrast, U.S. patients had access to all of them.
From an economic standpoint, international reference pricing would directly reduce investments in U.S. pharmaceutical R&D by as much as $50 billion over eight years, one study says. In Connecticut, where we rank 4th in the nation in bioscience patents per capita, that could mean slower growth, fewer jobs, and a bioscience industry less capable of continuing to develop potentially life-saving new medicines.
There is definitely room for improvement in Medicare and the Chamber of Commerce Eastern Connecticut strongly encourages Congress to actively pursue effective policy changes. We just want them to be sure that the changes they endorse put patients first, but still maintain the strength of the bioscience industry both here in Connecticut and across the entire nation.
Tony Sheridan is president and CEO of the Chamber of Commerce of Eastern Connecticutand chairman of the Connecticut Airport Authority Board of Directors.
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