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A Bad Prescription for American Patients

Free2Care is staunchly against the passage of the highly partisan Inflation Reduction Act (IRA). Like many health care measures before it, there are consequences in the bill that will decrease access and innovation, and increase consolidation and costs for all patients, all while disproportionately harming those with cancer and chronic disease.

Free2Care experts prescribe four major issues with the bill and legislative priorities that would actually address the issues of affordability and accessibility of health care.

1. Pharmaceutical middlemen—Pharmacy Benefit Managers aka PBMs— collect legalized kickbacks and are responsible for 80% of the cost of insulin, get a gift in the Inflation Reduction Act.

Almost 50% of what is called “deficit reductions” come from repealing the Trump Administration’s ‘rebate’ rule. The rebate rule would have forced PBMs to pass on the ‘rebates’ they collected to seniors at the prescription counter instead of pocketing the rebates themselves.

Rebate is not the appropriate word for the money collected by the PBMs from the drug manufacturers: the PBMs were granted an exemption from the anti-kickback statute in 2003, and thus rebates are actually kickbacks. . Remarkably, the kickback collecting PBMs get to create the formularies—the lists of drugs covered by the insurance companies. A bigger kickback lands a drugmaker on the formulary, so more expensive medications are preferred for the PBMs and the insurers who have now consolidated with the PBM, and in some cases, even the big box pharmacies. The cost of the kickbacks is in the range of $200 Billion per year, all of this is explained elegantly by attorney David Balto.

By denying the “rebate rule" and declaring it to “pay for” new spending, the Inflation Reduction Act is a win for PBMs at the expense of seniors’ savings at the pharmacy counter. Former DNC chair Howard Dean, himself a physician, recognized the gimmick behind using the “rebate” rule as a pay-for.

Furthermore, Pharmacy Benefit Managers have been the driving force behind the cost of many medications necessary to sustain life for patients with chronic diseases or pre-existing conditions. Like Insulin.

A 2019 bi-partisan report, produced by Senators Wyden and Grassley, found that PBM fees and rebates were responsible for 80% of the cost of the inflated cost of insulin.

2. Chronic disease and cancer patients will lose access, consolidation will increase, and costs will rise down the road.

A new Avalare study has found that part of the Build Back Better Act, now folded into the Inflation Reduction Act, will reduce payments for Medicare providers that furnish Part B drugs (drugs that are given by infusion and therefore delivered in a clinical setting ) by an average of 40%. Drugs for cancer, immunodeficiencies, and rheumatologic diseases such as rheumatoid arthritis fall into this category.

Remarkably, the payment reduction is substantially higher for physicians in independent practices as opposed to those owned by hospitals. Besides the fundamental unfairness, the increased reduction will lead to the early retirement of independent oncologists and rheumatologists, and the continued consolidation of medical practices into ownership by hospitals.

Consolidation has been shown to increase costs in a Stanford study. Worse yet, quality of care, and the all-important personal and attentive care required by the vulnerable, especially among the elderly are decreased when independent practices are forced to sell out to hospital systems.

3. Fewer cures and treatments for patients with cancer, chronic and rare diseases.

The bill before the house imposes a 95% excise tax on innovative drug manufacturers unless they accept a price set by the HHS Secretary.

This is not negotiation, it is price controls.

A Univ. of Chicago September 2021 study estimates up to a 60 percent decrease in R&D and up to 342 fewer new medication approvals. Loss of life from loss of innovation over the next decade is conservatively estimated as 20 times more than COVID-19 deaths at the time of their study. There is no measure in loss of quality of life as many new meds have immeasurable improvement on quality of life.

Oncology patients will be the hardest hit as half of the medication pipeline is for cancer medications. Innovative research for cancer sufferers will decrease by nearly ten times the amount that the cancer moonshot increased it.

Small and emerging companies in California alone will have an 88% reduction in new medications brought to market according to the California Life Sciences Association. This will fundamentally shift the formation of small emerging bio markets across the United States.

4. Higher prices for other medications will lead to higher premiums and overall health care costs.

The Inflation Reduction Act would control the prices of a chosen set of medications. On August 4, the CBO confirmed that price controls will lead to higher prices for new prescription medications.

In turn, all Americans will pay higher insurance premiums and out-of-pocket costs at their pharmacies. Only the wealthiest Americans will be able to afford many cures.

Free2care has been supportive of the Lower Costs, More Cures Act, with bipartisan provisions to lower drug prices while increasing transparency for PBMs and preserving innovation. We are supportive of Senator Wyden’s call to have both CMS and the FTC intervene in the practices of corrupt PBM middlemen.

We are strongly supportive of Chairman Pallone’s HR-7666, which increases access for mental health and substance use disorder among other measures while reining in PBM. HR-7666 has the added benefit of having passed the house by more than 400 votes, thus demonstrating the call for the bipartisanship that America craves.

The Inflation Reduction Act will be harmful to the long-term health of Americans, especially those with chronic and pre-existing diseases. We call on all house members to reject this bill and ask the Senate to get back to the drawing board, this time reaching across the aisle.

Free2Care is a coalition of member organizations dedicated to the doctor-patient relationship and making healthcare affordable, accessible, and of high quality. The 34 member organizations represent over 8 million Americans and include over 70 thousand physicians.

In the recent request for comment by the Federal Trade Commission, the Free2Care Coalition represented approximately 75% of the 24,100 comments calling for a thorough investigation into the anti-competitive practices and behavior exhibited by pharmacy benefit managers.

HHS called for comments on the behavior of GPOs and Free2Care submitted comments representing 80% of the 11,930 submitted

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