top of page
Prescription Drugs

Prescription Drugs

Pharmaceutical costs are the most rapidly increasing part of healthcare costs. Without the ability to control these costs, premiums will go up faster. The problem with the high cost of prescription drugs is the price set by the manufacturers and wholesalers – not the reimbursement paid to the pharmacists.


  • A Pharmacy Benefit Manager (PBM) is a company that helps run prescription drug programs for payers like your insurance company. There are a couple key things that PBMs do that benefit consumers in Alabama.


  • First, PBMs are responsible for determining what drugs a plan will cover or not, lists that the drug industry calls “formularies.” You can think of this action as one of the checks and balances that attempts to keep Big Pharma honest. Instead of just allowing drugs backed by high-dollar marketing campaigns to be pushed through, PBMs act as a third party to ensure that medical decisions are made based on science and value.


  • Beyond safety and necessity, PBMs negotiate prices on behalf of consumers. Those efforts are done in advance—long before the consumer ever gets to the pharmacy counter—and are meant to keep insurance premiums and out-of-pocket costs as low as possible. Their efforts work. PBMs save payers and patients up to 50% on their annual prescription drug and related medical costs compared to what they would have spent without PBMs.


  • Even with the great work of PBMs, drug prices remain unaffordable for many across Alabama. This hurts people at the pharmacy counter and increases their premiums. Lowering healthcare costs starts with lowering one of the most significant drivers of health care spending: high-cost prescription drugs.


Podcast: Importance of PBMs in Health Care Costs


  • Allowing costs paid for on behalf of the patient (by pharmaceutical manufacturers or patient advocacy groups) to count towards an individual’s deductible or out-of-pocket maximum is problematic and results in higher costs to the health plan – therefore increasing premiums.


  • Big Pharma has introduced costly drug coupon legislation that would require health insurance plans to count the value of the coupon against a patient’s out-of-pocket spending limit. This would result in increased premiums and higher costs for a couple of different reasons.


  • First, more patients would stay on the higher cost drugs that the manufacturers are pushing, rather than switching to lower costs options that are equally effective. These additional brand name drug costs, while padding the pocket of Big Pharma, would have to be paid for through premium increases.


  • Second, counting the face value of the coupon against a person’s “out-of-pocket” limit would result in the person reaching their limit much earlier in the year, meaning that the plan would be required to cover the additional costs of other medical care.


  • The money that would not be spent by the patient (under the terms of their health plan) would have to be collected elsewhere - i.e., by raising premiums. Effectively, this would add the aggregate amount of all coupons used to the premiums of all customers.


  • Of course, Big Pharma is not interested in lowering the cost of drugs. Their message is that “out-of-pocket” spending should be reduced. However, premiums come from customers’ pockets just as much as co-pays do. What Big Pharma wants to do is make sure that the higher costs that fuel their profits come out of the customer’s other pocket - the one they pay premiums from. This frees them to increase their prices without fear of angering their customers, since the increases are simply driven into the higher premiums.


  • Gimmicky, costly drug coupon legislation is all about gaining and preserving market-share for Big Pharma, not about getting people needed medications.


  • Any attempt to lower the cost a customer pays at the pharmacy counter is an attempt by PhRMA to hide costs within the premium. These tactics are used to make a customer pay less money out-of-pocket and drive them to higher-cost drugs (the higher cost being paid by their insurer in reimbursements – and higher profits for pharmaceutical manufacturers).


 Go Deeper: Why Copay Caps on Insulin Actually Raise Costs


  • In response to increasing prices and record profits, Big Pharma often points to “rebates” as a way they are helping consumers. These rebates, however, pale in comparison to the cost increases associated with the drugs.


  • Johns Hopkins found that drug prices were 3.2 to 4.1 times higher in the U.S. on average than in comparison countries, even with rebates taken into account



PCMA Report: Drugmakers Raise Prices Regardless of Rebates

Take Action Today!

bottom of page