Time to Tear Down the Rebate Wall

Eli Lilly and Company  | February 28, 2020

Tags |  Policy

When patients are denied access to innovative medicines, they typically blame their health plans. But sometimes the true culprit is a pharmaceutical company.

Too many Americans aren’t getting the newest therapies because our health system incentivizes health plans to steer patients to older, high-volume medicines. In some cases, manufacturers of older medicines use the volume of their sales to block patients’ access to newer medicines. They do this by providing discounts and rebates for their own medicines only on the condition that their older medicine be used first.

This creates something that is known as the rebate wall, which is taking the medical decision-making out of the hands of doctors and putting it into the hands of accountants. Holding new medicines out of reach for many people, as their disease irreversibly progresses, is not right.

It is time for a better system – and at Lilly, we’re working toward policy solutions to help patients access the innovative medicines they need, faster.

Several stakeholders could take action and tear down the rebate wall. For example, the U.S. Federal Trade Commission (FTC) is responsible for protecting consumers from anti-competitive behavior. The FTC could examine the rebate walls that are currently in place, to understand their impact on competition, and on patients and health care providers. In another option, policymakers could reform the rebate system so rebates flow directly to the person receiving the medicine, rather than to their health plan.

With this change in place, people with diseases that require expensive medicines would no longer subsidize the cost of health insurance for those who are well, but would benefit from rebates directly. More information on potential policy solutions to the rebate wall can be found in our comments on the President’s Blueprint to Lower Drug Pricing, and in our comments on the changes to the Anti-Kickback Statute that were proposed. 

While these changes were suspended, many of the policy options we describe in our comments could still be implemented.

To learn more, check out these resources: 

  • This Washington Post piece describes the ways step therapy and the rebate wall impact patients’ access to treatment. 

  • This Law 360 article and this shorter summary article in STAT describe how rebate walls are built, as well as their consequences. We share Lilly’s perspective in this story. 

  • This article in Pharmacoeconomics - Open, by Lilly’s Natalie Boytsov, publishes research results that quantify the ways step therapy negatively affects treatment outcomes among people with inflammatory arthritis. The data show that in some cases, step therapy even damages people’s health. We published our perspectives on her article in this story. The Pharmacoeconomics study is also cited in these articles:

  • This Rheumatology Network article cites a Lilly/Xcenda white paper that demonstrates the impact of step therapy on patients. 

  • This FiercePharma article explains why consumer groups recently sent a letter to the FTC outlining concerns of a potential rebate wall. 

  • A letter to the FTC from California attorney general Xavier Becerra includes a recommendation for an evaluation of the impact of the rebate wall on competition.

  • Another letter to the Government Accountability Office (GA) from members of Congress requested that the GAO conduct a study on the issue and potential policy recommendations to address the harms caused by rebate walls.

  • In an op-ed from David Balto, former assistant director of policy and evaluation or the Federal Trade Commission, explains the roles Congress and the FTC could play in investigating and possibly bringing enforcement action against entities that erect rebate walls.

  • A new analysis from IQVIA and PhRMA found that 80% of commercially insured patients attempting to fill a new prescription in 2018 for a rheumatoid arthritis (RA) or multiple sclerosis (MS) medicine encountered a utilization management restriction.

  • In this op-ed, Randall Rutta, president and CEO of the American Autoimmune Related Diseases Association writes, rebate walls are a harmful practice that "forces patients to use a drug for which the insurer or PBM has negotiated the most profitable rebates."

  • This Inside Sources op-ed from Dr. Madelaine A. Feldman urges policymakers to examine pricing and formulary practices - like rebate walls and step therapy - that are "a pathway to market share dominance, but not necessarily optimal health for the patient."

The argument for change is strong. Now is the time to tear down the rebate wall to help improve patients’ access to newer innovative medicines.