As patients pay more for their medicines out-of-pocket, PBMs and insurers benefit from rebates and discounts that lower their prices for those same medicines, according to a recent report from the Bureau of Economic Analysis.

In fact, the report shows that the prices insurers make patients pay out-of-pocket for their medicines has steadily increased since 2016. The growth in patients' out-of-pocket prices far outpaced growth in the prices insurers faced for those medicines during the same time period.

Price indexes are normalized to 100 in 2007

These data provide yet another example of the growing gap between what insurers pay for medicines and what they decide patients must pay out-of-pocket.

As the report found, concerns about the cost of prescription drugs, "align more closely with the persistent increase in out-of-pocket prices than the recently stagnating growth of negotiated prices."

It also makes clear that rising out-of-pocket prices are likely to disproportionately impact lower-income individuals and patients with chronic disease.

Patients pay more, insurers pay less.

Insurers and PBMs often receive significant rebates and discounts that lower what they pay for medicines, yet often refuse to pass those savings directly to patients to lower what they pay at the pharmacy.

Instead, insurers are shifting more costs to patients through deductibles and coinsurance, which are often based on the list price of a medicine, not the lower net price insurers and PBMs pay.

When middlemen prevent savings from going to patients, they pay less as patients pay more. In fact, some patients can pay more for their medicines than their insurer or PBM did.

Savings should go to patients, not middlemen.

Congress has an opportunity to enact reforms to realign incentives in the market and stop middlemen, like PBMs and insurers, from profiting at the expense of patients.

Policymakers can pass reforms that require insurers and PBMs to pass savings directly to patients to lower their costs at the pharmacy and prohibit middlemen from profiting based on the list prices of drugs.

If policymakers want to increase access and lower the cost of prescription drugs, they should address the PBM middlemen in the system who are unfairly driving up the cost of medicines.

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