Higher Drug Costs for Patients Tied to Rebates for Insurers

A common industry practice of using rebates to reduce drug costs for insurers has sparked concern among federal agencies that out-of-pockets costs for patients and list prices have increased to a new level, according to a study from The University of Washington.

A research team from the university wanted to further investigate whether patients with or without insurance were paying more because of rebates to insurers. After examining the cost and price data on more than 400 branded drugs, the results showed that rebates were closely related to increases in out-of-pocket costs for patients by approximately $6 for those with commercial insurance, $13 for Medicare patients, and $39 for the uninsured, according to the study.

“We know that list prices have been increasing quite dramatically as have rebates, but no one has looked into the association between rebates and out-of-pocket costs,” said study lead author Kai Yeung, in the press release. “Increases in out-of-pocket costs are associated with rebates, however rebates also help keep premium costs down.”

The researchers looked at data on 444 branded drugs without generic equivalents from national datasets, including health care costs and drug prices from 2007 to 2018, such as the federal Medical Expenditure Panel Survey and SSR Health.

The team noted that the cost increases can influence patient health, since a higher cost can cause patients to take their medications less frequently, leading to more visits to the emergency department and increased hospitalization. Individuals analyzed in this study who did not have insurance had the poorest health, in addition to those with lower incomes who were less likely to take medication as prescribed when costs increased, according to the researchers.

The study authors suggest that future research and policies should focus on disassociating list prices from what patients pay out of pocket.

“The biggest takeaway is understanding that the rebates work to reduce the cost of prescription drugs for insurance companies and may reduce premiums,” said co-author Anirban Basu, in the press release. “And while it’s unclear how much the discounts are reducing premiums, they are definitely not translating to lower out-of-pocket costs for the patients who are using the treatment because of this structure of coinsurance and copayments tied to the list price.”

REFERENCE

Drug rebates for insurers tied to higher costs for patients, especially the uninsured. University of Washington. Published June 15, 2021. Accessed June 16, 2021. https://www.washington.edu/news/2021/06/15/drug-rebates-for-insurers-tied-to-higher-costs-for-patients-especially-the-uninsured/