Home Health Insurance A primer on brand-name prescription drug reimbursement within the US – Healthcare Economist

A primer on brand-name prescription drug reimbursement within the US – Healthcare Economist

A primer on brand-name prescription drug reimbursement within the US – Healthcare Economist


That’s the title of a latest paper by Hernandez and Hung (2024). The article supplies a wonderful overview of how medication get reimbursed within the US and who the important thing gamers are. I present an abbreviated abstract under, however do learn the full article.

The gamers

  • Producers analysis, develop, and convey new drug merchandise to market.
  • Wholesalers act as distributors of drug merchandise. Wholesalers buy the drug product from producers and distribute it to pharmacies and well being care suppliers.
  • Pharmacies dispense self-administered prescribed drugs to sufferers. Kinds of pharmacies embody retail, mail order, on-line, specialty, and institutional.
  • Well being care suppliers prescribe all prescribed drugs and administer drug merchandise that have to be supplied underneath the supervision of a well being care skilled (e.g., infusions, some injections).
  • Sufferers are customers of drug merchandise from well being care suppliers (physician-administered) or pharmacies (self-administered).
  • Well being plans or insurers (aka payers) present protection for medical and pharmacy companies to their members. Personal insurance coverage is funded by employers and workers; public insurance coverage (eg, Medicare, Medicaid) are funded with tax {dollars}. Medicine disbursed to sufferers at outpatient pharmacies are lined underneath the pharmacy advantage of an insurance coverage coverage, whereas provider-administered medication are lined underneath the medical profit. Well being plans or insurers typically subcontract the administration of pharmacy advantages to pharmacy profit managers (PBMs). Well being plans or insurers are additionally known as payers.
  • PBMs administer the pharmacy advantage of insurance coverage insurance policies and design formularies, negotiate reductions with producers, set up pharmacy networks, negotiate contracts with pharmacies or pharmacy companies administrative organizations, and course of and pay claims.
  • Group buying organizations (GPO) are shopping for consortiums that mixture buying energy amongst their members, permitting them to barter higher reductions than they’d entry on their very own. GPOs embody well being programs, clinics, specialty pharmacies, retail pharmacies, and PBMs.
  • Pharmacy companies administrative organizations handle and negotiate contracts with PBMs on behalf of unbiased pharmacies. Some pharmacy companies administrative organizations are affiliated or owned by wholesalers.

Movement of funds for drug lined by the Pharmacy Profit

Funds between these gamers are summarized by the graphic under for medication sufferers obtain by way of a pharmacy. The pharmacy could possibly be a regular free standing pharmacy (e.g., CVS, Walgreens), a pharmacy inside a hospital, or perhaps a mail-order pharmacy.


Movement of funds for drug lined by the Medical Profit

Right here, relatively than pharmacies delivering medication to sufferers, medical suppliers provide the medication. These suppliers obtain reimbursement each for the price of the drug administered and likewise the skilled companies rendered to manage this drug.


Trying ahead

The article additionally identifies a lot of key themes:

  • Drug costs have been rising in recent times, however rebates have been rising much more
  • Federal authorities drug worth negotiation is starting with the Inflation Discount Act (IRA)
  • Elevated vertical integration with insurers buying PBMs and the creation of GPOs owned by PBMs
  • Well being plans are more and more shifting specialty provider-administered medication to the pharmacy profit, by way of “white bagging” (having a specialty pharmacy dispense the drug and ship it to the supplier) or “brown bagging” (having a specialty pharmacy dispense the drug to sufferers to deliver to the supplier for administration)



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