Part 2: Dr James Robinson on the Impact of 340B Programs and Drug Pricing Policies

In the January issue of The New England Journal of Medicine, using 2020 to 2021 Blue Cross Blue Shield data, James Robinson, PhD, MPH, University of California, Berkeley, and his fellow investigators published their findings from an analysis of how insurer drug expenditures on infused drugs for patients who have cancer, an inflammatory disease, or a blood-cell deficiency disorder influenced price markups at hospitals and how the share of insurer drug expenditures retained differed among 340B Drug Pricing Program–eligible hospitals and ineligible hospitals vs independent physician practices.

In part 2 of our interview with Robinson, he addresses the potential for exacerbated health care disparities in the aftermath of hospital price markups, the inefficiency of the pharmaceutical supply chain, and how insurance plan design—notably, high cost-sharing plans with high deductibles—often put at a greater disadvantage the patients who most need expensive infusion therapies but cannot afford them.

Click here for part 1 of our interview with Robinson.

Transcript

Is there potential for exasperated health care disparities from these markups?

Anything that increases drug prices and cost-sharing disproportionately afflicts those members of society who use expensive drugs. For those of us, I can say for myself, I’m basically a very healthy person, I don't use these drugs, and so it doesn't really matter what's going on. But for the patients that do, they're the ones that are paying. You can talk about disparities by any metric you want—by race, by gender, by age, by location—but to me, the most relevant version of it is by health status. So this definitely aggravates the cost of being sick or the cost of needing expensive drugs for sure.

Can you explain the combined effect of these pricing dynamics on patients who may be receiving infusions and oral treatments?

This study focused just on the infused drug component, but many of the same dynamics occur on the oral drugs. Oral drugs, the way that the supply chain is, they go from the drug manufacturer to the distributor, and then they're sold to the retail and wholesale and mail order pharmacies, and then the PBMs [pharmacy benefit managers] negotiate a rebate back to the employee. Other studies have shown that also in that channel, about 50% of what the insurers pay never gets to the drug manufacturer, it gets absorbed by the middleman—different kinds of middlemen than the hospitals.

It just shows that the pharmaceutical supply chain is unbelievably inefficient if its core purpose is supposed to get drugs from manufacturers to patients as cheaply as possible. It's turned out to be a big revenue stream for all these other ancillary organizations, who of course now have a vested economic and political interest in keeping the system just the way it is.

How might access be affected for patients enrolled in different insurance plans?

Health insurance plans range on a spectrum from those with low-cost sharing where you might pay $5 or $10 for a prescription to those with high deductibles or coinsurance where you might pay 35%. Clearly, the plans with more cost sharing, those patients are more at risk from everything we've been talking about. Now, in some cases, patients have a choice between do they want a high-cost sharing plan with a low premium or a low-cost sharing plan with a high premium.

You could say, “Well, they've made their choice,” but often the people in these high-deductible, high-coinsurance plans are lower-income workers in smaller firms and that's the only thing they're being offered. It's sort of like that or nothing. It's another example of how this combination of perverse pricing and what I would call perverse insurance design combined to disadvantage those patients that need the most expensive drugs and often have lower income—that's why they're in those high-cost sharing plans.