The price Americans pay at the pharmacy can bear little resemblance to what a drugmaker ultimately receives. Between those amounts lies a complicated system of rebates, fees and insurance rules that can leave sick patients paying disproportionately high costs.
Antonio Ciaccia, CEO of nonprofit 46brooklyn Research, argues that the system rewards negotiating discounts from inflated prices rather than competing to offer the lowest price upfront.
Ciaccia describes situations in which “the sick patient overpays for a drug and a rebate is generated that doesn’t go to the patient.” Instead, that money can flow to pharmacy benefit managers, insurers or employers.
Pharmacy benefit managers, or PBMs, negotiate prices and help determine which medicines insurance covers. Their industry says those negotiations reduce costs. But savings passed to a health plan do not necessarily reduce an individual patient’s pharmacy bill, particularly when deductibles or percentage-based payments are calculated before manufacturer rebates.
Medicare illustrates that disconnect. Negotiated prices for 10 drugs took effect in January, while plans increasingly use deductibles and percentage-based coinsurance.
KFF, the national nonprofit that focuses on national health policy, identifies financial pressures on insurers as one likely contributor. Covered Part D spending is capped at $2,100 this year, but patients can still face substantial upfront bills.
President Donald Trump’s pharmaceutical tariffs introduce another uncertainty. The policy has moved beyond a proposal: an April proclamation established duties as high as 100% on certain imported patented medicines and ingredients, with staggered implementation dates.
Generics are excluded, and trade agreements and company commitments provide substantial exemptions.
The administration says tariffs will encourage American manufacturing and pricing concessions. However, additional import costs could reach patients through higher drug charges or insurance premiums; a 100% tariff does not automatically double a prescription bill.
Guest:
Antonio Ciaccia is a drug pricing expert, strategist, and consumer advocate recognized for his work in exposing inefficiencies and lack of transparency within the United States prescription drug supply chain. He is best known for his research on Pharmacy Benefit Managers (PBMs) and their impact on drug costs and independent pharmacies.
Ciaccia is president of the consulting firm 3 Axis Advisors and founder/CEO of nonprofit 46brooklyn Research,
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