AHIP, PhRMA Swap Blame for High Healthcare Costs

The nation's big drug and health insurance lobbies are blaming each other for rising healthcare costs.

They're at it again!

The nation's largest drug and health insurance lobbies are blaming each other for rising healthcare costs that are footed ultimately by consumers.

The longstanding feud between the two powerful players reignited this week when America's Health Insurance Plans (AHIP) launched what it is calling "a major new advertising campaign" that "calls out how Big Pharma spends millions pointing fingers at others in the healthcare system to distract Americans from manufacturers' soaring drug prices – attempting to deflect blame, limit competition, and undermine patients' bargaining power.

"Over the past 20 years, pharmaceutical companies have earned more than $18.6 billion in total worldwide revenues on new prescription drugs that only cost them around $1.8 billion to develop," the ad says. "In fact, more than 22 cents of every premium dollar you pay goes into the pockets of Big Pharma to pay for prescription drugs—more than any other expense.

"And costs keep rising. The Wall Street Journal recently reported on a new generation of therapies that cost patients as much as $3 million each year for treatment."

AHIP says ad campaign "will blanket broadcast, social media, and direct placements in targeted outlets in Washington, D.C.," AHIP says.

Robert Traynham, a spokesman for AHIP, alleges that "Big Pharma continues to deceive and divert attention from real solutions and the root cause of high drug prices – Pharma's anti-competitive, price-gouging tactics."

"Manufacturers keep prescription drug prices high and undermine the evidence-based, market-driven tools we use to lower prices and provide more choices in quality care for Americans. Consumers, businesses, and taxpayers are stuck paying excessively high costs. Big Pharma's dishonest distractions have to stop," Traynham says.

PHRMA Slaps Back

It took about one day for the Pharmaceutical Research and Manufacturers of America (PhRMA) to respond.

Spokesman Robby Zirkelbach says the AHIP campaign comes as federal regulators are examining the role of pharmacy benefits managers in rising drug costs.

"If we needed any more proof that the health insurance and pharmacy benefit manager (PBM) industries are one and the same, look no further than a new ad campaign by AHIP," Zirkelback says. "With PBMs facing increasing scrutiny on Capitol Hill, AHIP is hitting the airwaves to deflect any responsibility for the high cost of medicine many people face. 

Zirkelbach dismisses the payers' lobby claims that PBMs are negotiating for lower drug prices on behalf of patients.

"They claim that all they do is negotiate savings for patients, but if that were true, then why are they facing lawsuits, investigations and regulation by state attorneys general, state legislatures, the Federal Trade Commission and United States Congress for their role in rising healthcare costs?," Zirkelbach says.

"The fact is insurance companies don't want anyone to look under the hood at the broken PBM business model that now makes up the majority of their profits," Zirkelbach says. "That's right: big insurers now generate more profits from their PBM business than they do delivering insurance coverage. But that's not the only thing the insurance industry doesn't want the public to see. 

• PBMs charge fees tied to the price of medicines, which means they make more money when the price of medicine goes up. The FTC has warned this "may shift costs" and "ultimately increases patients' costs." They say they want lower prices, yet they often deny or limit coverage of lower-cost generics and biosimilars.
   
• In 2021, the net price for medicines – the price after rebates, discounts, and other payments from manufacturers – grew just 1%. The government's inflation data reveals that the prices for medicines grew less than 3% over the last year.
   
• Insurers and middlemen continue to take more and more money out of the system and shift high costs onto patients, like forcing those in their deductible to pay the full undiscounted price for their medicine.
   
• While payers claim 22 cents of every premium dollars goes to the drug industry, the facts show that innovative brand medicines make up just 11 cents of every premium dollar, while nearly twice as much goes to insurance profits and overhead costs.    

"With so much to hide, it's not surprising AHIP is trying to avoid any responsibility for the high drug costs many people face," Zirkelbach says. "We hope lawmakers will hold insurers and middlemen accountable with real reforms that rein in abusive insurance tactics and lower out-of-pocket costs at the pharmacy for patients."