How a proposal by Sen. Mitt Romney aims to lower prescription drug costs

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SALT LAKE CITY — A bill Sen. Mitt Romney introduced Thursday aims to bring transparency to the price of prescription drugs and reduce costs for consumers at the pharmacy.

“Patients in Utah and across the country are strapped with skyrocketing prescription drug costs, while insurance companies and drug manufacturers benefit from a complex system of rebates that results in higher drug costs,” Romney, R-Utah, said.

Romney and co-sponsor Sen. Mike Braun, R-Ind., say the legislation would change the cost-sharing rules to bring transparency to the prescription drug pricing system and lower out-of-pocket costs for medication.

Many health care plans require people to pay “coinsurance,” or a percentage of the total cost for medication. However, the coinsurance payment is often based on a drug’s “list price” rather than on the actual price negotiated by drug manufacturers, wholesalers and insurance companies, according to the senators.

Those groups — through a middleman known as a pharmacy benefit manager — successfully negotiate price rebates, discounts and other price concessions to lower the net price of the drug, but consumers are only shown the list price.

This bill would require all patients’ coinsurance payments be set as a percentage of net price, rather than list price, before or after a deductible is met.

The nation's health system creates a "perverse" incentive to raise list prices in order to obtain steeper rebates — to the patient’s detriment, the senators said. Under the current system, when list prices rise, so does the patient’s coinsurance payment because the two are linked together.

"These rebates are often hidden from consumers, contribute to high list prices for prescription drugs and leave consumers with all, or a big part, of the tab," Braun said.

Even when drugs are covered by insurance, he said, patients with cost-sharing obligations are often required to pay 30 percent to 40 percent of high drug list prices out of their own pockets.

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Dennis Romboy
Dennis Romboy is an editor and reporter for the Deseret News. He has covered a variety of beats over the years, including state and local government, social issues and courts. A Utah native, Romboy earned a degree in journalism from the University of Utah. He enjoys cycling, snowboarding and running.


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