Noshing With Antonio Ciaccia – November 9, 2023

President, 3 Axis Advisors

In this enlightening episode of Ira’s Everything Bagel Podcast, host Ira Sternberg delves into the complex world of prescription pricing with Antonio Ciaccia, the president of 3 Axis Advisors. Known for his deep expertise in the pharmaceutical industry, Antonio discusses the findings of a groundbreaking study conducted by his company, which explores how prescription prices are set. This episode uncovers the intricate role that Pharmacy Benefit Managers (PBMs) play in determining the prices consumers pay at the pharmacy counter and raises important questions about the transparency and fairness of the current system.

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The Role of Pharmacy Benefit Managers (PBMs) in Prescription Pricing

Understanding PBMs and Their Influence

Pharmacy Benefit Managers (PBMs) are intermediaries in the healthcare system that manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other payers. In this episode, Antonio Ciaccia explains how PBMs, which were originally introduced to help contain drug costs, have evolved into powerful entities that often do the opposite. The study conducted by 3 Axis Advisors revealed that the overwhelming majority of prices paid by consumers at the pharmacy are based on price points established by these PBMs. This means that rather than negotiating lower prices, PBMs often contribute to the inflation of drug costs.

The Broader Ecosystem: Overpaying for Brand Drugs

Why Are Consumers Overpaying?

One of the key findings discussed by Antonio Ciaccia is the phenomenon of overpayment for brand-name drugs. In the broader ecosystem of drug pricing, consumers are often forced to overpay due to the complex and opaque pricing strategies employed by PBMs and health insurance companies. Ciaccia explains that these entities frequently set higher prices for brand drugs, which can result in significant out-of-pocket expenses for consumers. This overpayment is further exacerbated by a lack of transparency in the pricing process, making it difficult for consumers to understand why they are being charged such high prices.

Health Insurance Companies and PBMs: Cost Containment or Cost Inflation?

The Role of Health Insurance Companies

Health insurance companies are supposed to act as a check on drug prices, ensuring that consumers get the best possible prices on their medications. However, as Antonio Ciaccia points out, the reality is often quite different. Instead of containing costs, health insurance companies, working in tandem with PBMs, often contribute to the inflation of drug prices. This is because PBMs and health insurers can benefit from the higher list prices of drugs through various rebates and fees that are not always passed on to consumers. This practice creates a perverse incentive for PBMs and insurers to prefer higher-priced drugs, even when cheaper alternatives are available.

The Call for Transparency and Ending the Anti-Kickback Exemption

Proposing Reforms

In response to these troubling findings, Antonio Ciaccia advocates for greater transparency in the drug pricing process and calls for an end to the exemption to the anti-kickback law that currently allows PBMs to receive rebates from drug manufacturers. This exemption has been a key factor in the misaligned incentives that drive up drug prices. By eliminating this exemption and increasing transparency, Ciaccia believes that the market can be reformed to better serve consumers, ensuring that they are not overpaying for their medications.

Antonio Ciaccia’s Background and Expertise

From Pharmacy Technician to Industry Leader

Antonio Ciaccia brings a wealth of knowledge and experience to his role as president of 3 Axis Advisors. His journey began as a pharmacy technician, where he gained firsthand experience in the pharmaceutical industry. He later pursued dual degrees in communications and political science from The Ohio State University, which paved the way for his career in research and association management. For several years, Ciaccia led government affairs for the Ohio Pharmacists Association, where he became a vocal advocate for drug pricing transparency.

3 Axis Advisors: Shining a Light on the Pharmaceut...