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Auditor General Says Rebate Pricing Scheme Actually Raised Prescription Drug Prices For Consumers

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PITTSBURGH (KDKA) - Visiting the Hometown Pharmacy in New Castle, state Auditor General Eugene DePasquale lambasted a system that he says drives up prescription drug costs for consumers and threatens the existence of independent pharmacies.

According to DePasquale, the system is singling out rebates that pharmaceutical companies offer the middleman - the pharmacy benefit managers and insurance providers.

"Rebates never reach the hands or the wallets of consumers or the independent community pharmacies that fill their prescriptions," said the auditor general Thursday morning.

Calling it a pricing scheme, DePasquale says, "The rebate system artificially raises the cost of those drugs by up to 30 percent."

"That means your brand name heart medication, for instance, is almost a third more expensive than it needs to be."

So why would a manufacturer's rebate raise prices?

"Manufacturers who are required to offer a rebate on a drug simply set a higher starting list price in order to maintain their profit."

The auditor general says it's just like a typical Christmas sale where the seller bumps up the price of a shirt thirty dollars in order to knock twenty bucks off.

"That game is happening with prescription drugs."

"And what's even more insulting with that is that unlike the shirt that you can choose not to buy when it comes to prescription drugs in many instances it's about your health or in some instances even the life of the patient."

DePasquale says this is all done without transparency behind consumers' backs.

"Rebates are passed on behind the scenes between drug manufacturers, pharmacy benefit managers, and insurance providers. and the innocent victims in this are the independent pharmacists and the consumers who are paying the cost for this as well."

An industry spokesman called DePasquale's report biased and said proposals to eliminate rebates will spike patient costs even higher.

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