Millions of Americans who rely on prescription medicines just received some bad news.
The Trump administration recently shelved a proposal that would have saved patients billions at the pharmacy counter. By changing course, the administration missed a chance to help patients afford the medicines they need.
The rule was aimed at Medicare's "Part D" program, which provides prescription drug coverage to seniors and those living with disabilities.
More than 40 million Americans depend on Part D. Patients can choose from a variety of plans, each with different premiums, copays, and lists of covered drugs called formularies.
Insurers typically hire "pharmacy benefit managers" to design these plans and negotiate with drug companies.
PBMs have enormous leverage. Each PBM represents several insurers — and millions of patients. The three largest PBMs alone manage 70 percent of all prescriptions filled in the United States.
Drug companies are eager to offer major discounts in exchange for a spot on a plan's formulary. On average, manufacturer rebates cut drug list prices by up to 30 percent. Last year, PBMs secured $166 billion in discounts and rebates.
But these discounts aren't directly passed on to patients. PBMs keep a small portion of these rebates for themselves and pass the rest to insurers.
In other words, the discounts that PBMs secure are not reflected in the prices that patients pay. That's bad for those living with autoimmune disorders, since so many of us rely on multiple medicines to control our disease.
The Trump proposal would have re-categorized these discounts as "kickbacks" unless they were shared with patients at the point of sale.
Estimates suggest if 100 percent of rebates were passed directly to patients, Part D beneficiaries would save $57 billion over the next decade.
Savings like these would improve health outcomes. One in three Americans reported "not taking their medicines as prescribed at some point in the past year" because of cost. All told, so-called "non-adherence" claims 125,000 American lives each year.
Simply put, when patients can afford their medicines, they stay healthy.
Absent needed reforms, today flawed rebate system remains intact providing little direct financial relief to patients, continuing their struggle to afford their medicines.
The Trump administration would have spurred needed reform and helped millions of patients. But instead, the administration has disappointingly decided to preserve an obscure system that keeps drug prices high.