Schaeffer Center Research on the Pharmaceutical Distribution Chain

Schaeffer Center Research on the Pharmaceutical Distribution Chain

White Papers

• U.S. Consumers Overpay for Generic Drugs – May 31, 2022
  Growing evidence shows that U.S. consumers often overpay for generics as pharmacy benefit managers game opaque and arcane pricing practices to pad profits. Greater transparency across the generic prescription distribution chain and policies to spur competition and deter anticompetitive practices can reduce generic drug costs.
• How Would Sharing Rebates at the Point-Of-Sale Affect Beneficiary Cost-Sharing in Medicare Part D? – May 17, 2020
  If cost-sharing were based on net price it would provide meaningful financial relief to many Part D beneficiaries.
• The Association Between Drug Rebates and List Prices – February 11, 2020
  Drug rebates and list prices are positively correlated: On average, a $1 increase in rebates is associated with a $1.17 increase in list price.
• State Drug Pricing Transparency Laws: Numerous Efforts, Most Fall Short – September 25, 2019
  166 recently enacted prescription drug pricing laws were analyzed to identify those that contained price transparency measures. Of these, 35 bills in 22 states include a transparency component, but only 7 were deemed to be informative.

• Overpaying for Prescription Drugs: The Copay Clawback Phenomenon – March 12, 2018
  In 2013, almost one-quarter of filled pharmacy prescriptions (23%) involved a patient copayment that exceeded the average reimbursement paid by the insurer by more than $2.00.
• Prescription Drug Copayment Coupon Landscape – February 7, 2018
  The researchers examined copay coupon availability for the top 200 drugs (by spending) in 2014. Of these, 132 were brand drugs, and 90 of those had coupons available.
• Reining in Pharmaceutical Costs – January 12, 2018
  The administration and lawmakers should prioritize four actions that could engender more cooperation and improve health over the long term.
• Flow of Money Through the Pharmaceutical Distribution System – June 6, 2017
  For every $100 spent at retail pharmacies, about $17 compensates for direct production costs, $41 accrues to the manufacturer, and $41 accrues to intermediaries in the distribution system.

Journal Articles

• Estimation of the Share of Net Expenditures on Insulin Captured by US Manufacturers, Wholesalers, Pharmacy Benefit Managers, Pharmacies, and Health Plans From 2014 to 2018 – JAMA Health Forum – November 5, 2021
  One of the most comprehensive looks at the insulin distribution chain and shows which players are profiting, and by how much, from selling insulin.

• Comparison of Spending on Common Generic Drugs by Medicare vs Costco Members – JAMA Internal Medicine – July 27, 2021
  A study comparing Medicare Part D prescription drug prices with those paid by Costco members finds that the federal government overpaid on roughly half of the most common generic medicines in 2018.
• Do Companies in the Pharmaceutical Supply Chain Earn Excess Returns? – International Journal of Health Economics and Management – January 4, 2021
  Public policies that promote competition in all areas of the pharmaceutical supply chain are important avenues for curtailing drug spending.
• Analysis of State-Level Drug Pricing Transparency Laws in the United States – JAMA Network Open – September 25, 2019
  A study analyzing state drug price transparency laws to assess their potential to improve transparency in the drug supply system.
• Insulin Access and Affordability Working Group: Conclusions and Recommendations – Diabetes Care – May 11, 2018
  The average list price of insulin has skyrocketed in recent years, nearly tripling between 2002 and 2013. The reasons for this increase are not entirely clear but are due in part to the complexity of drug pricing in general and of insulin pricing in particular. Schaeffer researchers were part of the ADA working group that looked into this issue.
• Frequency and Magnitude of Co-payments Exceeding Prescription Drug Costs – JAMA – March 13, 2018
  Twenty-three percent of prescription claims analyzed involved a copay overpayment.

Perspectives

• Who Is Really Driving Up Insulin Costs? – MedPage Today – April 18, 2022
  In the long term, capping insulin payments at $35 a month is just shuffling the deck rather than changing the game of insulin costs.
• Middlemen, Not Drug Companies, Are Pushing Up Insulin Prices, and Congress Doesn’t Have the Right Plan to Fight Back – MarketWatch – November 19, 2021
  Congress should take advantage of the current political climate and start reining in the intermediaries in the drug distribution system.
• Insurer Formularies Complicate the Adoption of Biosimilar Cancer Therapies – Health Affairs – April 8, 2021
  Insurer preferences for biologic and biosimilar drugs add cost and complicate the work of hospital pharmacists and physicians.
• Sharing Drug Rebates With Medicare Part D Patients: Why And How – Health Affairs – September 15, 2020
  The percentage of total Medicare Part D drug spending offset by rebates on branded drugs increased from 11% in 2010 to 25% in 2018.
• Who Pays in Medicare Part D? Giving Plans More Skin in the Game – The New England Journal of Medicine – November 20, 2019
  As U.S. policymakers debate proposals for reforming the prescription-drug marketplace, they should recognize the need to update the Medicare Part D benefit design to give the private plans that largely administer it more skin in the game.
• Ending Drug Rebates Will Increase Medicare Part D Premiums. Most Seniors Will Be Insulated From It – STAT – February 19, 2019
  Due to subsidies, ending drug rebates will likely marginally impact seniors.
• Surprise! Trump Might Actually Lower Drug Prices – The Washington Post – August 28, 2018
  Health and Human Services Secretary Alex Azar wants to end kickbacks in the pharmacy distribution chain that are costing Medicare and taxpayers billions of dollars.
• Follow the Money to Understand How Drug Profits Flow – STAT – December 15, 2017
  Only by following the money will a clear understanding emerge of the economic forces roiling the industry and driving price increases.

Events

• Getting It Right: Drug Pricing Reform That Works for Patients and the Medicare Program – October 14, 2022
  Schaeffer Center and the Alliance for Aging Research hosted a conversation on the current proposals to reform drug pricing.
• Drug Rebates in Medicare Part D – July 27, 2021
  The USC-Brookings Schaeffer Initiative for Health Policy hosted a webinar to discuss how the increasing reliance on rebates burdens many Medicare patients and discuss policy solutions.
• Patient Cost-Sharing for Prescription Drugs: Policy Issues – February 16, 2018
  The USC-Brookings Schaeffer Initiative for Health Policy hosted a conference on the policy issues surrounding patient drug cost sharing. Two panels convened, first to discuss restructuring the Medicare Part D benefit design, and then to debate the effectiveness of mechanisms to reduce cost sharing for commercially insured patients.
• Fostering Competition in the Pharmaceutical Distribution Chain – June 14, 2017
  The USC-Brookings Schaeffer Initiative for Innovation in Health Policy hosted a forum to explore the many segments of the drug distribution chain and examine proposals to reduce price markups through increased competition.

Policy Input

• Comments to the Federal Trade Commission on Pharmacy Benefit Managers – May 25, 2022
  Researchers at the USC Schaeffer Center have been studying the pharmaceutical distribution system since 2016; these comments about PBMs draw on that body of research.