That is the title of a latest paper by Hernandez and Hung (2024). The article supplies a wonderful evaluation of how medicine get reimbursed within the US and who the important thing gamers are. I present an abbreviated abstract beneath, however do learn the full article.
The gamers
- Manufacturers 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. Types of pharmacies embrace retail, mail order, on-line, specialty, and institutional.
- Health 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).
- Patients are shoppers of drug merchandise from well being care suppliers (physician-administered) or pharmacies (self-administered).
- Health plans or insurers (aka payers) present protection for medical and pharmacy companies to their members. Private insurance coverage is funded by employers and staff; public insurance coverage (eg, Medicare, Medicaid) are funded with tax {dollars}. Drugs disbursed to sufferers at outpatient pharmacies are coated underneath the pharmacy advantage of an insurance coverage coverage, whereas provider-administered medicine are coated underneath the medical profit. Health plans or insurers usually subcontract the administration of pharmacy advantages to pharmacy profit managers (PBMs). Health 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 combination buying energy amongst their members, permitting them to barter higher reductions than they’d entry on their very own. GPOs embrace 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.
Flow of funds for drug coated by the Pharmacy Benefit
Payments between these gamers are summarized by the graphic beneath for medicine sufferers obtain via a pharmacy. The pharmacy could possibly be a normal free standing pharmacy (e.g., CVS, Walgreens), a pharmacy inside a hospital, or perhaps a mail-order pharmacy.
Flow of funds for drug coated by the Medical Benefit
Here, fairly than pharmacies delivering medicine to sufferers, medical suppliers provide the medicine. These suppliers obtain reimbursement each for the price of the drug administered and likewise the skilled companies rendered to manage this drug.
Looking ahead
The article additionally identifies numerous key themes:
- Drug costs have been rising in recent times, however rebates have been rising much more
- Federal authorities drug value negotiation is starting with the Inflation Reduction Act (IRA)
- Increased vertical integration with insurers buying PBMs and the creation of GPOs owned by PBMs
- Health plans are more and more shifting specialty provider-administered medicine to the pharmacy profit, via “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 convey to the supplier for administration)