Is Big Pharma to blame for drug prices? Complaint handling shows that this is not the case

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New Jersey’s research-based biopharmaceutical industry is constantly developing new cures and treatments that benefit New Jerseyans and patients around the world. Over the past two years, we have all witnessed the industry’s remarkable and rapid response to identify, treat and vaccinate against COVID-19 with innovative diagnostics, antivirals and vaccines.

At the same time, industry critics claim that biopharmaceutical companies are the root of all the ills in our nation’s healthcare system. This conclusion is simply not based on the facts, it creates a fundamentally inaccurate perception of the industry and does a disservice to one of the pillars of New Jersey’s economy and the more than 400,000 people of New Jersey. Jersey who are connected to our life sciences industry.

Let’s look at some key claims to support this misguided claim.

Requirement: Biopharmaceutical companies sell their drugs to patients.

FALSE. Biopharmaceutical manufacturers sell to wholesalers who, along with other players in the supply chain, add their profit margin and sell to retailers, who add their own profit margin and sell to patients. The result is that today more than half (50.5%) of the cost of brand name drugs is absorbed in the supply chain.

Requirement: Biopharmaceutical companies set the price at the pharmacy counter.

FALSE. The retailer, after acquiring the product from the wholesaler and adding his own margin, sets the price at the pharmacy counter. For this reason, prices may vary from pharmacy to pharmacy.

Requirement: Biopharmaceutical companies set direct consumer spending.

FALSE. Reimbursable deductibles and co-payments are set by the consumer’s insurance plan. These disbursements therefore vary from one patient to another depending on the level of coverage of his insurance plan. Biopharmaceutical companies have no role in setting these reimbursable costs. In contrast, Pharmacy Benefit Managers, or PBMs, have an outsized impact on consumer drug spending. Drugmakers pay about $187 billion annually in rebates to PBMs, which is about 33% of the total drug price. However, unlike physician, hospital, and lab fees, where the patient’s bill lists and reflects the negotiated insurance discount that is applied to the price of the procedure or service, prescription drug discounts and discounts are rarely passed on to the consumer (compare, for example, when buying a car, the manufacturer’s rebate is passed on to the consumer rather than staying with the dealer or middleman).

In response to this situation, West Virginia in April 2021 became the first state to enact legislation requiring PBMs to share savings and pass on rebates from biopharmaceutical manufacturers to consumers. This is the type of measure that deserves to be considered a viable and effective means of reducing drug costs for consumers.

Requirement: The elderly are forced to pay exorbitant prices for their medicines.

FALSE. All seniors have access to Medicare Part D (whose average monthly premium for 2022 is $33), each senior can tailor coverage to their own specific pharmaceutical needs, and low-income seniors also have access to Medicare Part D. state pharmaceutical assistance to the elderly. and the Disabled, or PAAD, and Senior Gold programs for additional coverage at no cost. Therefore, every New Jersey senior should have access to prescription drug coverage with an affordable co-payment as low as $5.

Requirement: Medicines represent the main cost of health care.

FALSE. Each year, the Centers for Medicare and Medicaid Services, or CMS, publishes an analysis called “The Nation’s Health Dollar: Where It Went.” For 2019, prescription drugs accounted for just 10% of healthcare costs, after hospitals at 31% and medical and clinical services at 20%. Not only are these percentages the same as in 2011, but the percentage of prescription drugs has remained relatively stable over the past 30+ years.

Additionally, 90% of all prescriptions are filled with generic drugs and, according to analytics firm IQVIA, 90% of all consumers pay less than $500 a year in prescription drug costs.

We urge that, as opposed to unfounded and derogatory rhetoric, any discussion of ways to reduce healthcare costs for patients be evidence-based, and that we work together to develop real, evidence-based solutions. evidence to help patients in need access their medications in a way that also makes New Jersey the “medicine chest of the world.”

Dean Paranicas is the CEO of the HealthCare Institute of New Jersey, a trade association that serves as the voice of our state’s leading research-based biopharmaceutical and medical technology companies.


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