Many employers are unknowingly amassing drug rebate cash that’s funded by their sickest employees, in response to Mark Cuban.
Throughout Forbes’ Healthcare Summit final week in New York Metropolis, Cuban famous that Individuals are sometimes paying full listing costs throughout their deductible durations, successfully subsidizing the rebates that stream again to pharmacy profit managers and employers. It is a dynamic he argues most CEOs don’t totally perceive.
Cuban pointed to a standard situation: an worker enrolled in a high-deductible well being plan receives a prescription for a brand-name drug like Eliquis, which might retail round $600 a month. Till the worker meets their deductible, they need to pay that full listing value — even when the PBM has negotiated a considerable rebate on the drug.
That rebate, which might quantity to a whole lot of {dollars} per prescription, by no means makes its method again to the affected person footing the invoice. As a substitute, the cash goes by way of the PBM and in the end again to the employer, Cuban defined.
To him, this construction flips the intent of rebates on its head. Relatively than reducing prices for the individuals who want the remedy, this technique finally ends up utilizing these sufferers’ excessive out-of-pocket funds to generate rebate checks that profit their employer. Cuban warned that by benefiting from rebates funded by sick employees, corporations may very well be falling in need of their obligation to behave in workers’ greatest pursuits below the Worker Retirement Earnings Safety Act.
He highlighted direct-to-employer drug buying fashions as a option to keep away from this difficulty.
His firm, Price Plus Medicine, is creating direct-to-employer drug applications designed to bypass PBMs and safe web pricing. This manner, workers aren’t subsidizing rebates with their very own medical payments, Cuban acknowledged.
“I sit with the CEO, and I say, ‘Look, you’re getting ripped off by your PBM. And I perceive it’s tough to simply transfer, however there are a rising variety of direct-to-employer applications which might be being created,’” he remarked.
Certainly one of Price Plus Drug’s companions for its direct-to-employer drug pricing mannequin is CenterWell, Humana’s healthcare companies model.
Humana CEO James Rechtin famous that CenterWell desires to simplify its drug provide chain to ship drugs extra effectively and transparently. The corporate is doing extra contracting instantly with producers so customers and employers can see the true web value of medication and eschew the layers of intermediaries that drive up costs.
“With pharmacy, we mainly appeared on the conventional mannequin, and we mentioned, ‘We’re not getting the associated fee effectivity, the affordability, that we have to to make it possible for our members are gaining access to drugs,’” he mentioned.
If efforts to remove the middlemen proceed to scale, employees might save billions in out-of-pocket prices, Rechtin and Cuban agreed.
Picture: mathisworks, Getty Pictures
