Drug Prices May Be Going Up, But Thanks To Rebates, Consumers Are Actually Paying Less

Drug companies are offering bigger discounts to the middlemen who manage prescriptions for health plans, which means less of a hit to consumers' wallets. In other pharmaceutical news: Sen. Mitt Romney (R-Utah) and PhRMA, rationing insulin, and Anthem's 2019 forecast.

The Wall Street Journal: Despite Raising Prices, Big Pharma Is Selling Drugs For Less
Drug companies may be raising list prices in the U.S., but discounts mean the actual price of many drugs is falling. Novartis AG on Wednesday said net prices—the sum it gets after discounts to the list price—slipped last year and would continue to fall in 2019. Although drug companies are still raising list prices, they are under growing political pressure to limit those increases. At the same time, companies are offering bigger discounts to the middlemen who manage prescriptions for health plans, as the drug companies try to win favorable treatment of their products, such as lower patient co-payments. The upshot: drug prices after the discounts, know as rebates, are going down. (Roland, 1/30)

Stat: Romney To Speak Before Closed PhRMA Board Meeting 
Sen. Mitt Romney (R-Utah) plans to deliver an address to a closed meeting of the drug industry’s powerful lobbying group on Thursday, a clear sign of the industry’s interest in courting the newly minted lawmaker. Romney’s plans to speak at the upcoming board meeting of PhRMA — to be attended by CEOs from major drug makers like Merck, Pfizer, and Johnson & Johnson — were described to STAT by three drug lobbyists. He is scheduled to appear for 30 minutes. (Florko, 1/30)

CNN: To Save His Parents Money, This Diabetic Teen Cut Back On His Insulin
Dillon Hooley loves his parents, so when he heard last year they were struggling to pay for his insulin, he wanted to help out any way he could. The high school senior came up with an idea: He would cut back on his insulin by about a third. Dillon, who has type1 diabetes, is supposed to keep his blood sugar levels between 130 and 150. After he started rationing insulin, his levels jumped as high as 300. (Cohen and Bonifield, 1/30)

The Associated Press: New Prescription Business Helps Fuel Anthem 2019 Forecast
The Blue Cross-Blue Shield insurer Anthem topped fourth-quarter earnings expectations and unveiled a better-than-expected 2019 forecast, helped by an early start for its prescription drug coverage business. Shares of the nation's second-largest health insurer soared after Anthem said Wednesday that it will start moving customers into its new business in this year's second quarter, several months ahead of schedule. (Murphy, 1/30)

The Wall Street Journal: Anthem’s PBM Plans Boost Earnings Expectations
Anthem said that the earlier transition comes because of Cigna Corp.’s CI 0.71% recent acquisition of Express Scripts Holding Co., Anthem’s previous pharmacy-benefit manager, which allowed Anthem to terminate their contract well before the end of 2019, when the break had been expected. Anthem said it will exit the Express Scripts contract on March 1 and begin a yearlong process of transition the next day, with members beginning to migrate in the second quarter. Anthem reiterated previous estimates that, on a full-year basis, switching to its own PBM will generate approximately $4 billion in savings a year, with approximately 20% of that dropping to Anthem’s bottom line. (Wilde Mathews and Prang, 1/30)

This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.

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