This summer, we saw remarkable, bipartisan progress on addressing rising health care costs — an issue voters have consistently ranked as most important.
The challenge for lawmakers right now is twofold: find effective solutions that make health care more affordable for all Americans without reducing access to the treatments many depend on.
While our health care system often seems like a tangled knot of misaligned incentives and bureaucracy, there is consensus on certain topics, and there are most certainly bipartisan solutions that Congress can implement to achieve this dual goal.
The issue is of particular concern for the mental health community. Millions of Americans confront mental illness each day and approximately one in six use some form of psychiatric medication. And for those battling addiction, medication can sometimes mean the difference between success and failure.
But medication is not a one-size-fits-all solution. Prescriptions must be monitored and adjusted as treatment progresses. It’s why organizations such as Mental Health America consistently oppose policies that would restrict access to new or varied medications.
So, what’s the best way to tackle this complex challenge?
Fortunately, many practical solutions have already been explored and are now just waiting for a champion to take them over the finish line.
Reforms like passing on some of the rebates in Medicare Part D will realign incentives throughout the whole system to increase competition and bring down prices — all while providing actual savings at the pharmacy counter.
This specific proposal was first championed by the Trump Administration, which had vowed to make health care costs a priority. Unfortunately, the administration abandoned the rebate idea; however, Congress can still champion reform.
The plan is simple enough — forcing insurance companies and pharmacy benefit managers (massive private companies that act as “middlemen” between drug companies and insurers) to pass on drug rebates to patients directly at the point of sale.
For patients struggling with high costs of care, passing on rebates would provide immediate relief, while potentially saving the government money. For example, it is estimated that sharing a portion of the negotiated rebates with diabetes patients on Medicare could save those patients up to $20 billion over the next 10 years as a result of improved adherence and reduced health care spending — resulting in savings across the entire Medicare program.
The same savings potential could apply to patients being treated for other conditions, including mental health and substance use disorders. Imagine how this would impact seniors on fixed incomes.
Most importantly, this plan addresses the rising cost of prescription drugs.
Currently, pharmacy benefit managers pocket rebates, claiming they spread the cost of drugs throughout premiums, co-pays, and other patient fees. So not only are patients not receiving the cost savings (i.e. rebates) intended for them, but the cost of medicines and plans, which would otherwise be unaffected, are rising. It’s a double whammy.
As former FDA Commissioner Scott Gottlieb put it: “The sick people are helping to subsidize the healthy people. That’s not how insurance is supposed to work.”
It’s important to note that our current system has a macro, inflationary effect on drug prices as well. Pharmacy benefit managers and insurers, because they can pocket these rebates, are incentivized to maximize the number of rebates they can receive. And since rebates are used for the most expensive drugs, this means that benefit managers are also incentivized to keep drug prices high—or steer patients toward high-priced drugs.
Both practices increase costs for families across the nation, and for our health care system as a whole.
Removing incentives would allow benefit managers to function as they should: negotiate prices down and help patients find effective and affordable treatment options.
I look forward to members of Congress from both sides of the aisle rolling up their sleeves and addressing this problem by building on successes of the past. We’ve expanded coverage; it’s time to overhaul the system. Rebate reform is the best place to start.
Former U.S. Rep. Patrick J. Kennedy was lead sponsor of the Mental Health Parity and Addiction Equity Act of 2008 and served on the President’s Commission on Combating Drug Addiction and the Opioid Crisis. He is co-chair of Mental Health for Us and co-author, with Stephen Fried, of A “Common Struggle: A Personal Journey through the Past and Future of Mental Illness and Addiction.”
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