How We Can Keep Texas Patients From Being Overcharged at the Pharmacy

By Rhonda F. Turner | 5/11/2023, 11:34 a.m.
When Texans go to the pharmacy to fill a prescription, they generally know that their insurers may require them to …

When Texans go to the pharmacy to fill a prescription, they generally know that their insurers may require them to pay "coinsurance," a percentage of the medication's cost.

But they probably don't know that insurers calculate this coinsurance based on the drug manufacturer's "list" price for the drug -- not the heavily discounted price the insurer is actually paying. In some cases, these discounted prices are 70% lower.

Fortunately, our state lawmakers may soon address patient costs by uniting behind Texas House Bill 2180, led by state Rep. Cody Harris. This bill, which saw broad support at a recent hearing in the House Select Committee on Healthcare Reform, would lower patients' out-of-pocket costs by allowing 100% of the rebates currently retained by insurers and pharmacy benefit managers (PBMs) to pass directly through to patients at the pharmacy or point of sale.

This would be a huge benefit to breast cancer patients all across the state. In my work as executive director of the Global Breast Care Initiative here in Texas, I'm all too familiar with what these cancer patients go through. But while there are more than 275,000 breast cancer diagnoses in the U.S. each year, new treatments have pushed the disease's five-year survival rate to 90%. Let's build on this positive momentum by working to ensure that all patients in Texas see some out-of-pocket savings.

Insurers and PBMs negotiate with drug makers over which medicines will be covered by the health plans. Drug manufacturers are willing to offer substantial discounts to secure a favorable position on an insurer's "formulary," or list of covered drugs. But patients have no knowledge of how much a drug maker has discounted its medicines for the PBMs and insurers. In fact, patients are likely not aware of these discounts at all, because insurers don't have to tell them. Rebate agreements are confidential.

Here's an illustration: You get a prescription for a drug with a list price of $1,000 a month, and your coinsurance requirement is 20%. But your insurer has negotiated a discount of 50%, so it's actually paying $500 a month for your medication.

You probably think it would be fair to pay 20% of the $500 that your insurer paid -- $100. But your insurer would rather you pay 20% of the list price -- which is $200. And since you don't know a thing about the discount, you pay twice as much as you should.

Oh, and if you're still in your deductible, you'll pay the full $1,000 list price out-of-pocket, even though your insurer is getting the medication for $500.

One recent study shows that, on average, drug makers rebate more than half the list price of their medicines back to insurers, PBMs, the government and other entities. This should result in lower drug costs for everyone, but it doesn't.

That's where Texas HB 2180 comes in. Texas patients statewide could see their prescription costs drop if this bill becomes law. Moreover, a major study found that monthly insurance premiums would only increase by about half of 1%.

With Texans better able to afford prescribed medications, it's safe to assume they'll be healthier and spend less time at the hospital or a doctor's office.

We've had enough of secrecy and greedy middlemen. Last year, one of the largest PBMs that contracted for Texas' Medicaid programs lost a $165 million lawsuit filed by the state of Texas, for overcharging patients.

This conduct must stop. Let's pass HB 2180 for Texas patients and put an end to the deadly profiteering.

Rhonda F. Turner is the executive director of the Global Breast Care Initiative.