Health Care Insurance Providers Issue Alerts Against Undisclosed Pharmaceutical Pricing - New Legislation Facilitates Transparency
In the realm of healthcare, a contentious issue has arisen with the implementation of the Medical Research Act (MFRA), also known as "Lex Lilly" due to Eli Lilly's heavy lobbying. This law, which came into force nine months ago, allows drug manufacturers to keep prices secret from health insurers for new drugs.
For Health Insurers:
The MFRA has introduced several consequences for insurers. Firstly, reduced transparency means insurers often lack insight into the actual prices paid for drugs, complicating cost management and pricing strategies. However, secret price negotiations can potentially lead to cost savings, as insurers may obtain medications at significantly lower prices than the list price.
Managing these confidential agreements requires more complex contracting and administrative oversight, adding operational burdens. Moreover, unequal bargaining power may arise, with large insurers negotiating better terms than smaller ones, leading to inequalities in costs and coverage.
For Insured Individuals:
The implications for insured individuals are equally significant. Patients generally do not know the true net costs of medications, making it challenging to compare prices or understand why costs for the same medication differ between insurers or pharmacies.
Access and formulary decisions may also be impacted, as insurers might preferentially cover drugs with better-negotiated prices, potentially limiting choices if drugs without discounts are placed on higher copayment tiers or excluded. Furthermore, since negotiated prices can vary widely, individuals without strong insurance or those paying out-of-pocket may still face higher list prices, exacerbating affordability issues.
Overall:
Critics fear that rising costs for insured persons without improved benefits could result from the use of this law. The Central Association of Health Insurers (GKV) predicts that insured persons may have to pay millions more each year due to secret prices without any improvement in care.
Eli Lilly, the pharmaceutical company behind the diabetes medication Mounjaro, is using the MFRA to keep the price of this drug secret from health insurers. This practice has drawn criticism from various sources, including inFranken.de, NDR, MDR, and SZ, which have reported the Central Association's rejection of secret prices, citing increased costs to the benefit of the pharmaceutical industry without improved care.
The implications of this law on the pricing of new drugs, as demonstrated by Eli Lilly's use of it, are currently a matter of concern. The GKV believes that secret prices will not result in improved care for insured persons. The cost will ultimately be paid by the insured, according to the Central Association, benefiting the pharmaceutical industry with potential profit increases.
During the time of the federal government under Federal Chancellor Olaf Scholz, Eli Lilly strongly advocated for the implementation of the MFRA. The impact on patient costs and access ultimately depends on how savings are managed and passed down through the insurance and healthcare system. The MFRA aims to balance the need for pharmaceutical companies to recoup R&D investments while enabling insurers to curb drug spending. However, the resulting price secrecy introduces challenges in transparency, equity, and consumer empowerment.
- The implementation of the Medical Research Act (MFRA), also known as "Lex Lilly," has introduced challenges in transparency for health insurers, making it difficult for them to manage costs and pricing strategies due to the secret prices of new drugs.
- The implications for insured individuals are profound, as they generally do not know the true net costs of medications, making it challenging to compare prices, understand why costs differ, and ensuring fair access to drugs.
- The Central Association of Health Insurers (GKV) predicts that insured individuals may have to pay millions more each year due to secret prices, raising concerns about affordability and improved care under the MFRA, particularly with Eli Lilly's use of the law to keep the price of Mounjaro secret.
