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Drug rebate bill would help chronically ill Hoosiers, proponents say

By Steve Bittenbender | The Center Square contributor

Mar 31, 2023

(The Center Square) – Indiana lawmakers are again considering legislation that proponents say would reduce prescription drug costs for Hoosiers with chronic conditions.

Senate Bill 8 passed that chamber by 42-5 vote last month. Sponsored by state Sen. Ed Charbonneau, R-Valparaiso, it would require that 85% of any rebate applied to a prescription go toward the price the individual pays at the counter.

The current practice serves as a kind of tax or “reverse insurance” for individuals with diabetes, cancer or other debilitating illnesses, said George Huntley, CEO of the Diabetes Patient Advocacy Coalition.

It’s an issue that affects Indiana more than other states because the state has a high portion of residents fighting chronic illnesses. According to America’s Health Rankings 2022 report, nearly 12% of Hoosier adults have multiple chronic conditions. The U.S. average is 9.6%

Huntley said that by not receiving the rebate, beneficiaries spend their deductible to get less medication. In some cases, the costs of the drugs are so high that people decide not to get them.

For example, Huntley said a person may pay $200 for a prescription, but the pharmacy benefit manager may have negotiated a discounted price of $100. Rather than giving the difference back to the person, the PBM will take a share and then give the rest to the insurance company.

“The whole point of the deductible is you’re putting your skin in the game, but they shouldn’t get part of your skin,” he said. “So, it’s a tax.”

It’s also “reverse insurance,” he said, because insurance companies will say they’re using the rebate to keep costs down.

“The sick are subsidizing the healthy,” he said.

An individual with chronic illnesses is likely to spend all their deductible - although not necessarily just on medicines - so Huntley said there’s “zero economic benefit” for insurers to receive the bulk of the drug rebate.

While the bill passed easily in the Senate, it has not gained much traction in the House. That’s a similar fate that last year’s version of the bill endured.

SB 8 was discussed last week in House Insurance Committee, where Huntley and others spoke to committee members.

In that meeting, Maddie Augustus, the director of the Indiana Association of Health Plans, challenged Huntley’s assertions and said that SB 8 would force everyone to pay more since plans serve as a pool for everyone involved.

“By requiring that the individual who uses the high-cost, brand-name drug receive at least 85% of the rebate at point-of-sale, you’re potentially creating a small benefit in the moment while also creating the need for a premium increase for everyone in that plan paying for that care,” she said.

While the bill remains in the committee, Chairman Martin Carbaugh, R-Fort Wayne, has offered an amendment that would change the split to 50% for beneficiaries.

Huntley described that proposal as a poison pill that would cause his group to drop support for the measure.

“From a patient’s perspective, there’s no reason why a pharmacy benefit manager or insurance company should get half of the rebates while the patient’s in their deductible period,” he added.


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