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Tuesday, March 5, 2024

A primer on brand-name prescription drug reimbursement within the US – Healthcare Economist

That’s the title of a latest paper by Hernandez and Hung (2024). The article gives a superb overview of how medication get reimbursed within the US and who the important thing gamers are. I present an abbreviated abstract beneath, however do learn the full article.

The gamers

  • Producers analysis, develop, and convey new drug merchandise to market.
  • Wholesalers act as distributors of drug merchandise. Wholesalers buy the drug product from producers and distribute it to pharmacies and well being care suppliers.
  • Pharmacies dispense self-administered pharmaceuticals to sufferers. Forms of pharmacies embrace retail, mail order, on-line, specialty, and institutional.
  • Well being care suppliers prescribe all pharmaceuticals and administer drug merchandise that must be offered beneath the supervision of a well being care skilled (e.g., infusions, some injections).
  • Sufferers are customers of drug merchandise from well being care suppliers (physician-administered) or pharmacies (self-administered).
  • Well being plans or insurers (aka payers) present protection for medical and pharmacy providers to their members. Personal insurance coverage is funded by employers and workers; public insurance coverage (eg, Medicare, Medicaid) are funded with tax {dollars}. Medication disbursed to sufferers at outpatient pharmacies are lined beneath the pharmacy good thing about an insurance coverage coverage, whereas provider-administered medication are lined beneath the medical profit. Well being plans or insurers usually subcontract the administration of pharmacy advantages to pharmacy profit managers (PBMs). Well being plans or insurers are additionally known as payers.
  • PBMs administer the pharmacy good thing about insurance coverage insurance policies and design formularies, negotiate reductions with producers, set up pharmacy networks, negotiate contracts with pharmacies or pharmacy providers administrative organizations, and course of and pay claims.
  • Group buying organizations (GPO) are shopping for consortiums that mixture buying energy amongst their members, permitting them to barter higher reductions than they might entry on their very own. GPOs embrace well being methods, clinics, specialty pharmacies, retail pharmacies, and PBMs.
  • Pharmacy providers administrative organizations handle and negotiate contracts with PBMs on behalf of unbiased pharmacies. Some pharmacy providers administrative organizations are affiliated or owned by wholesalers.

Circulation of funds for drug lined by the Pharmacy Profit

Funds between these gamers are summarized by the graphic beneath for medication sufferers obtain by means of a pharmacy. The pharmacy may very well be an ordinary free standing pharmacy (e.g., CVS, Walgreens), a pharmacy inside a hospital, or perhaps a mail-order pharmacy.


Circulation of funds for drug lined by the Medical Profit

Right here, reasonably than pharmacies delivering medication to sufferers, medical suppliers provide the medication. These suppliers obtain reimbursement each for the price of the drug administered and in addition the skilled providers rendered to manage this drug.


Trying ahead

The article additionally identifies quite a lot of key themes:

  • Drug costs have been rising lately, however rebates have been rising much more
  • Federal authorities drug value negotiation is starting with the Inflation Discount Act (IRA)
  • Elevated vertical integration with insurers buying PBMs and the creation of GPOs owned by PBMs
  • Well being plans are more and more transferring specialty provider-administered medication to the pharmacy profit, by means of “white bagging” (having a specialty pharmacy dispense the drug and ship it to the supplier) or “brown bagging” (having a specialty pharmacy dispense the drug to sufferers to carry to the supplier for administration)

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