Is the PPACA Annual Tax on Branded Drugs Contributing to Higher Drug Costs?

PBIRx®
Intelligent Solutions in Pharmacy Benefits
12 Wheelers Farms Road, Milford, CT 06461
(888) 797-2479

Hidden in the many pages of the original  2010  Patient Protection and Affordable Care Act (ACA), is Section 9008 from the Internal Revenue Service, which requires an annual fee on each covered entity engaged in the business of manufacturing or importing branded prescription drugs to “specific government programs”, to be paid not later than September 30th of each year.    “Specific government programs” refers to Medicare Parts B and D, Medicaid, Department of Veterans Affairs, Department of Defense and the Tricare retail pharmacy program.

On July 28, 2014, the Internal Revenue Service (IRS) issued final regulations (26 CFR Parts 51 and 602) on the fee, which is treated as an excise tax for purposes of subtitle F of the Internal Revenue Code (Code) (sections 6001-7874).  The final regulations describe the rules related to the fee, including how the IRS computes it and how covered entities pay it.  The fee is assessed, collected, enforced, subject to examination and summons and subject to confidentiality rules in the same manner as taxes imposed by the Code.  The fee applies to calendar years beginning after December 31, 2010.  

In general, the fee is imposed on each covered entity with aggregated branded prescription drug sales of over $5 million to specified government programs or pursuant to coverage under such programs.

There were a few articles in June about the rising drug costs by Pfizer – 91 drugs rose by an average of 20% in 2017.   How much of that price increase is due to the IRS’s required brand fee/excise tax?   Obviously the brand manufacturers are going to pass this fee down the chain of payers including pharmacies, wholesalers, plan sponsors and, of course, consumers.    

The Washington Examiner article dated June 2, 2017, commented that pharmaceutical companies price their drugs high to recoup the soaring research and development costs. Consumer and patient advocacy groups complain that there is no way to determine how much of the revenue goes to actual research versus marketing.  However, few mention the required fee/tax, payable to our government by covered entities, i.e. pharmaceutical manufacturers , as being another contributor of the two to four  increases in Average Wholesale Prices on drugs per year.

If you would like to learn more about these fee calculations, please go the IRS website at:

PBIRx has been exclusively providing intelligent solutions to clients in the management of pharmacy benefit costs since 1993. With a staff that includes IT personnel, actuaries, financial analysts, clinical pharmacists, attorneys, HIPAA Compliance Officers and many more experts, PBIRx’s mission is to create optimal health care outcomes while minimizing overall health care costs. For more information, please visit www.pbirx.com or call (888) 797-2479.

Voluntary Drug Recall

PBIRx®
Intelligent Solutions in Pharmacy Benefits
12 Wheelers Farms Road, Milford, CT 06461
(888) 797-2479

Lupin Pharmaceuticals, Inc. has announced that they voluntarily recalled Mibelas 24 Fe (Norethindrone Acetate and Ethinyl Estradiol 1mg/0.02 mg chewable and ferrous furnarate 75mg) Tabelts -- Lot L600518 with an expiration date of 5/18.

A packaging error occurred and the weekly tablet orientation has been reversed whereby the first four days of therapy would have had four non-hormonal placebo tablets as opposed to the active tablets.

This product is an oral contraceptive indicated for the prevention of pregnancy.  The products are packaged in blistered packs containing 28 tablets.  

Customers who have these products should contact their physician and return the prescription to the place of purchase.

PBIRx has not only notified its Clients who have members on this drug, but also worked with the client’s various PBMs to be sure that the members are notified.

To view the full announcement, go to https://www.fda.gov/Safety/Recalls/ucm560904.htm

PBIRx has been exclusively providing intelligent solutions to clients in the management of pharmacy benefit costs since 1993. With a staff that includes IT personnel, actuaries, financial analysts, clinical pharmacists, attorneys, HIPAA Compliance Officers and many more experts, PBIRx’s mission is to create optimal health care outcomes while minimizing overall health care costs. For more information, please visit www.pbirx.com or call (888) 797-2479.

The Causes of Rising Prescription Costs

PBIRx®

Intelligent Solutions in Pharmacy Benefits

612 Wheelers Farms Road, Milford, CT 06461

(888) 797-2479

You certainly do not need to be a patient that relies on a prescription or a professional in the pharmaceutical industry to know that the cost of prescription drugs is still on the rise. But considering that this is a reality we all face, the real question here is why - why is the cost of drugs still not showing any sign of slowing down? Although there are various factors that go into the cost of a drug, there are a few possible reasons that can be directly pinpointed to explain this trend; we have outlined three of them below:

1. Lack of control: While other countries are very particular about the way drugs are priced, the United States government does not have a policy when it comes to the regulation of drug prices. Ultimately, drugs are given their value based on what other drugs cost after they are compared to one another, not by what the government says they should be priced at.
2. Scarce competition: The more competition, the more likely it is to see a drop in prescription drug costs. However, competition is something that is often lacking when it comes to new drug treatments. As a result, those very few companies who produce a valuable drug tend to offer them at an extremely high cost - it is not until more hit the market that you can potentially expect to see a slight decrease.
3. Cost of research: The process of developing and seeking approval for a new drug is incredibly costly for drug manufacturers. Therefore, it is only natural that they first enter the market with a price that seems over the top. As the cost of manufacturing new drugs continues to rise, it is only natural to see a rise in the cost of the final product too.

While we may not be able to escape the fact that the cost of prescription drugs is continuing to skyrocket, one thing providing entities can do is have their pharmacy benefit audited to ensure that all contract language accurately reflects the actual claims adjudication, including the discounts, dispensing fees, rebates and guarantees stated in your current Agreement. Auditing your pharmacy benefit by an expert like PBIRx can also provide you with the information to know if your current financial model is competitive or how much money you are leaving on the table of the PBM.

If you have yet to meet with an expert team about your pharmacy benefit contract, start by calling PBIRx at (888) 797-2479. Through our comprehensive approach, you can start to get more control over your health care costs at a time when it matters most.

Government Targets Prescription Drug Costs

PBIRx®

Intelligent Solutions in Pharmacy Benefits

612 Wheelers Farms Road, Milford, CT 06461

(888) 797-2479

With prescription drug costs consistently proving to be a hot topic within our industry, it is no surprise to us that government officials are beginning to get involved with the regulation of prices. In recent news, Democrats in the House of Representatives have suggested an “Affordable Drug Pricing Task Force,” which is meant to help fight and push back against the constant skyrocketing costs.

According to an article from the International Business Times, the United States is guilty of spending approximately $1,000 per person on prescription drugs. Not to mention, our cost of brand-name drugs comes out to be about twice as high as those in countries like the U.K where the government is more heavily involved with the negotiation of such prices. Considering that the ongoing rise of our drug costs is seemingly making it more difficult for patients to receive the care they need, it seems only right that the government is making an attempt to intervene.

Two particular problems that the U.S House of Representatives would like to see improvement on are:

1. That there is no transparency in our country's drug prices.
2. That the federal government does not have enough power when it comes to negotiating these prices.

However, one good thing that we can say for certain is that there is a bill in the hands of the Senate’s Finance Committee, which, if passed, would “grant the U.S Secretary of Health and Human Services the authority to negotiate with drug companies,” as reported by the International Business Times.

While there is no clear evidence that a task force such as the one proposed will actually lead to a decrease in drug prices, it is important to realize that government leaders are taking action - if you are following Presidential candidates, you may also already know that Hillary Clinton has her eyes set on reducing drug costs for Americans (more information here). Furthermore, Senator Bernie Sanders has also announced that he is investigating the rising cost of generic drugs. 

As a company whose primary goal is to find and explore cost saving solutions for clients with pharmacy benefits, we are always up-to-date with the latest news regarding the fight against rising drug costs. To stay up-to-date with us, be sure to connect with PBIRx on social media or give us a call at (888) 797-2479.

Hillary Clinton Seeks To Fix Prescription Drug Prices

PBIRx®

Intelligent Solutions in Pharmacy Benefits

612 Wheelers Farms Road, Milford, CT 06461

(888) 797-2479

Have you been keeping up with the current presidential hopefuls’ plans for the future? If you have not, one that we would like to call attention to is Hillary Clinton’s desire to lower prescription drug prices. With costs continuing to skyrocket, as was seen when Daraprim rose from $13.50 to $750 nearly overnight for one pill, it does not surprise us that prescription drug prices are on the minds of those seeking office.

According to a recent article from USA Today, Clinton’s plan is to have pharmaceutical companies place more of their focus on research, with the hopes that doing so would lead to more generic and imported drugs. As we all know, the production of generics is very important for those who require prescriptions being that they are much more cost effective than brand-name alternatives. This, the article explains, would permit Medicare to “negotiate lower drug costs and cap out-of-pocket expenses for individuals with chronic health problems.”

Diving deeper into her plan, Clinton would also like to see drug companies using our tax dollars to further research and develop new drugs rather than for advertising purposes that solely benefit the company themselves. Additionally, alongside the hope that more generics would make their way to the market, Clinton mentions that she would like to see a reduction in the amount of time that companies can “exclusively produce new treatments.”

However, with all that said, we would like to point out that Clinton’s plan primarily focuses on the member, rather than the entities responsible for providing pharmacy benefits. Should this plan ever take effect, it will be extremely important for entities to keep an eye on what they are paying for their pharmacy benefits, as there may still be a spike in the costs they must cover even if more attention is brought to rebates for government and drug manufacturers.

This is where the team at PBIRx comes in. As a pharmacy benefit consulting and auditing company that strives to aid providing entities with their pharmacy benefit plans, we always have their best interests in mind when it comes to health care costs. Between our financial analysts, clinical pharmacists, attorneys and other experts in the pharmacy benefit management industry, we help our clients evaluate their plans and can deliver and implement solutions that find them cost-saving opportunities where applicable.

To learn more about our pharmacy benefit consulting and auditing services, or for more information about our take on Clinton’s drug pricing plan when it comes to your pharmacy benefits, please give us a call at (888) 797-2479.

Americans Continue To Struggle With Prescription Drug Costs

PBIRx®

Intelligent Solutions in Pharmacy Benefits

612 Wheelers Farms Road, Milford, CT 06461

(888) 797-2479

Once again prescription drug costs are making headlines as they continue to put a strain on our wallets. As reported recently by CNBC, approximately one third of Americans who rely on prescription medications are still struggling to keep up with price changes, and as a result, they're cutting back on their spending elsewhere. Though a $40.00 increase (on average) may not seem like much, it sure does add up quickly - especially for those who need more than one prescription.

In addition to cutting back on recreational activities or worse - cutting back on other things they need like groceries and food - CNBC explains that some patients are starting to view their prescriptions differently and "cut corners" with how they use them. And the result? Certainly a negative one on their health. In fact, the CNBC article details that Consumer Reports found that "24 percent of people who had seen higher drug prices in the past 12 months had skipped filling a prescription because of the cost."

Although health insurance changes have been made due to Obamacare, the out-of-pocket costs are what is doing it for patients. Brand-name, generic and specialty drugs have all seen a spike in price, and unfortunately, many of the common medications utilized are rising the most. "Medications that treat common conditions including asthma and high blood pressure were at the top of a list of drugs whose prices have risen in recent years," says CNBC. 

Since the need for prescription medication is certainly going to stick around, it is important for all providing entities to stay up to date with their pharmacy benefits to ensure that employees and members have the coverage they need to obtain what they need. If you're in charge of your entity's pharmacy benefits, give us a call at (888) 797-2479 or visit www.pbirx.com to learn how we can audit your plan for accuracy today!