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The Biden administration is celebrating that it has negotiated lower prices for ten drugs in the Medicare program. That's a first. But the health care system is complicated, and the implications for consumers facing those new prices have not yet come into focus. NPR pharmaceuticals correspondent Sydney Lupkin reports.
SYDNEY LUPKIN, BYLINE: When Beth Waldron was 34, she nearly died of a blood clot in her lungs. It turned out Waldron, who is now 55, had a clotting disorder. She has to be on blood thinners for the rest of her life. She eventually settled on a drug called Eliquis because her doctor said it was the most effective for her condition. But in late 2021, Waldron got a letter from her insurance company's pharmacy benefit manager.
BETH WALDRON: It just simply said, contact your doctor before January 1 for a new drug or be prepared to pay full price for what you're currently taking. And I was completely shocked.
LUPKIN: She learned she would have to go through several hoops to get Eliquis covered again, including trying and failing on another blood thinner. She said failing means either having a clot or a bleed. The thought was terrifying.
WALDRON: My father was on an anticoagulant, and he developed a bleed in his lungs which the doctors were not able to control, and he actually died as a result of his bleed.
LUPKIN: But insurers - or rather the middlemen, called pharmacy benefit managers, that handle their drug claims - do have a reason for restricting some drugs. Pharmaceutical industry veteran Richard Evans says the PBMs, for short, use their ability to say no to covering a particular drug to get a better price.
RICHARD EVANS: The payer is playing a game of musical chairs in these categories and basically saying to the brands, you know, hey, I've got two or three options here. I'm only going to cover one. So best foot forward, give me a big discount or, you know, you're not going to get the spot.
LUPKIN: He says the strategy only works if there's competition between brands for the same kind of drug, like blood thinners. That's great if the drug you need gets the best coverage and a low co-pay, not so great if your drug is moved to a tier with bigger co-pays and where it's harder to access. Yet that's what could happen with some of the drugs in Medicare that were subject to negotiation for the first time, like Eliquis.
The program that covers drugs for 50 million people was banned from negotiating drug prices until a change in the law championed by the Biden administration. The first 10 negotiated prices were announced this month. The government got discounts on blockbuster blood thinners, including Beth Waldron's, as well as drugs for arthritis, cancer, diabetes and heart failure. But 6 out of 10 new negotiated prices are pretty close to the ones that Medicare plans were already getting behind the scenes, according to Richard Evans' firm, SSR Health, which analyzes drug prices. He says that may prompt PBMs to push patients away from those negotiated drugs.
EVANS: I think more likely than not that the drugs are going to be disadvantaged in formulary negotiations versus the drugs that did not get negotiated.
LUPKIN: That's because the PBMs take at least some of the spread between the price the PBM gets and the sticker price. They use it to do things like keep premiums down. So on the Medicare-negotiated drugs, there's not much left for the PBM to work with. Here's Tim Dube of the Pharmaceutical Care Management Association, which is the trade group for PBMs.
TIM DUBE: It's not sure there's much juice left to squeeze at that point. Those manufacturers are going to feel some pain, and they may not, you know, be willing to negotiate much more.
LUPKIN: Plans have to include the 10 negotiated drugs on their menus of covered drugs under the law, but that doesn't mean they will be given the best placement. So Medicare beneficiaries could have problems accessing them. Stacie Dusetzina of Vanderbilt University says the federal government will be watching.
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