Study Links Drug Rebates For Insurers To Higher Out-Of-Pocket Costs For Patients

Drug rebates for insurers often are associated with increases in out-of-pocket costs for patients, according to a new University of Washington study that examined cost and price data on more than 400 branded drugs.

“We know that list prices have been increasing quite dramatically as have rebates, but no one has looked into the association between rebates and out-of-pocket costs,” Kai Yeung, the study’s lead author and an affiliate assistant professor at the CHOICE Institute in the UW School of Pharmacy, said in a statement issued by the university. ”Increases in out-of-pocket costs are associated with rebates; however, rebates also help keep premium costs down. [Consequently], there has been inadequate focus on the impact the pricing mechanism has on the uninsured, who are most affected.”

Indeed, average out-of-pocket costs associated with rebates were highest for uninsured patients ($39), followed by Medicare patients ($13), and then those with commercial insurance ($6).

“The biggest takeaway is understanding that the rebates work to reduce the cost of prescription drugs for insurance companies and may reduce premiums,” co-author Anirban Basu, the Stergachis Family endowed director of the CHOICE Institute and professor of health economics at the UW School of Pharmacy, said in the university’s statement. “And while it’s unclear how much the discounts are reducing premiums, they are definitely not translating to lower out-of-pocket costs for the patients who are using the treatment because of this structure of coinsurance and copayments tied to the list price.”

The study, published June 14 on the JAMA Network, used data on 444 branded drugs without generic equivalents from national datasets involving healthcare costs and drug prices from 2007 to 2018, according to the university.

“We found that rebates, likely through simultaneous increases in list prices, were associated with out-of-pocket cost increases and that these impacts appear to have grown,” researchers concluded. “This system amplifies health equity concerns, as individuals without insurance are disproportionately disadvantaged. These findings suggest that with the number of individuals without insurance expected to increase, future research and policy considerations should focus on potential solutions to decouple list prices and out-of-pocket costs, especially for individuals without insurance.”

Individuals in study who did not have insurance had the poorest health, and those with lower incomes were less likely to take medication as prescribed when costs increased. “Furthermore,” researchers noted, “individuals without insurance were more likely to be in racial minority groups, which may amplify preexisting disparities in health care access.”


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