| By Jay Hancock and Sydney Lupkin, Kaiser Health News

Lisa Crook was lucky. She saved $ 800 last year after her insurance company started covering a new, cheaper insulin, Basaglar, virtually identical to the brand she had been using for years.

The list price of Lantus, a long-acting insulin made by Sanofi and injected once a day, had almost quadrupled in a decade.

With Basaglar, "the cost of insulin has never gone down so much," said Crook, a Dallas legal assistant with type 1 diabetes.

But many diabetics can not get the deal that Crook had. In a practice that, according to policy experts, stifles competition and keeps prices high, pharmaceutical companies routinely enter into hidden pacts with intermediaries that effectively prevent patients from acquiring cheaper generic drugs.

Such agreements "prevent generics from competing with the competition or know what they are competing with," said Stacie Dusetzina, associate professor of health policy at the Vanderbilt University School of Medicine.

Here's how it works: Well-established brand manufacturers provide volume-based discounts to insurers or intermediaries, called benefit managers. In return, these intermediaries often leave competing generic products among the drugs they cover, called forms, or they raise the price of patients. The result is that many can not get the cheapest drugs if they do not support a larger share or buy them without insurance.

Brand-name drug vendors "pay for the position" on the form, said Michael Rea, CEO of Rx Savings Solutions, which helps health plans and employers manage pharmaceutical costs. "In this country, the most profitable drugs do not necessarily mean that anyone will have access … [Companies with] the the deepest pockets win. "

This so-called discount trap adds to the long history of brand-name drug companies striving to smother generics, including protecting drugs with multiple layers of questionable patents, by offering "pay-to-delay" deals to keep generics out of the market and retaining the key ingredients needed. for generic production, say the critics.

Because discount contracts are secret, no one knows the extent of the practice nor how much it costs the health system in unrealized savings.

"Agreements between pharmaceutical companies and PBM intermediates are as severely protected as Fort Knox," said Robin Feldman, a law professor at the University of California at Hastings, who studies drug policy. "Nobody can see them."

But new research reveals plenty of evidence of market-distorting discounts, such as many cases of lower-cost, cost-effective generics missing forms or patients experiencing higher costs for generic drugs.

Dusetzina's research found that only 17 percent of Medicare plans for the elderly covered Basaglar, the biosimilar launched by Eli Lilly two years ago, she said. Almost all of them covered the Lantus brand, sold by Sanofi, at the beginning of last year.

His research suggests that the discounts granted by Sanofi may have led insurers to let Basaglar be cheaper on their forms, Dusetzina said.

Sanofi works with insurers and drug benefit managers "to negotiate access for patients to our product portfolio, including Lantus, "said company spokesman Jon Florio, refusing to disclose the details.

Medicare plans covering Lantus but not Basaglar include many offers from Anthem, the largest for-profit insurer Blue Cross and Blue Shield.

"The agreements between the pharmaceutical companies and the intermediary actors of the PBM are as severely protected as Fort Knox."

– Robin Feldman, University of California at Hastings

"After assessing the total cost impact for consumers, taxpayers and the government, we chose to cover the branded drug, Lantus, compared to the biosimilar, Basaglar," the spokeswoman said. Anthem, Lori McLaughlin.

Replacement versions of complex drugs often made from living cells are called biosimilars and not generic. Basaglar is considered clinically equivalent to Lantus but, due to a legal wrinkle, will not technically be considered a biosimilar by regulators until 2020.

Merck abandoned its own biosimilar version of Lantus last fall, despite interim approval from the Food and Drug Administration, after "assessing … the market environment," the company said.

The coverage of Lilly's Basaglar has increased and the drug is now included in the forms used by just over half of patients who have health insurance, said Eli Lilly spokesman Greg Kueterman.

In another upcoming study, which looks at Medicare coverage in 2018, researchers at Johns Hopkins' Bloomberg School of Public Health revealed that "almost all diets include at least one brand name drug on the form that is better in their place than the credits, "said Gerard Anderson. the professor leading the research.

(A grant from the Laura and John Arnold Foundation, which helps support Kaiser Health News, funded the Hopkins research.)

In 2015, only 19% of generic Medicare-covered drugs were in the preferred form levels with the lowest costs in the market, revealed a study last year by consultant Avalere. In 2011, however, 71% of generics were in the top category, which helps determine which patients are prescribed.

The Association for Accessible Medicines, the generic drug lobby, funded this study. The barriers to generic-related discounts are "getting more and more problematic," said Chip Davis, CEO of AAM.

Disputes over the choice of forms have been litigated. Pfizer filed a lawsuit against Johnson & Johnson in 2017, alleging that the rebates encouraged insurers to prefer Remicade, a biological anti-inflammatory product, at the expense of Pfizer's cheaper product.

The main Trump administration officials, criticized by a president who promised to lower the price of drugs, are among the critics of the traps related to discounts.

Because fast brand discounts are often more appealing to companies and insurers than to long-term generic savings, "this is a real challenge in terms of the biosimilars entering the market and gaining share. market, "said Scott Gottlieb, FDA's chief executive, in a statement. interview.

Such objections add to a crescendo of grievances against hidden discounts. Consumers and advocates have been complaining for years that discounts reduce costs for PBMs and insurers, but little for patients, who are often forced to pay their share based on increasing list prices.

Crook's expenses for Lantus have steadily increased over the years to about $ 900 a year, she said. After spending in Basaglar last year, its cost was less than $ 100.

"Her personal expenses for Lantus have increased steadily over the years to around $ 900 a year. After spending in Basaglar last year, its cost was less than 100 dollars. "

Mark Gooley, who has type 1 diabetes and lives in Florida, said he had begun ordering Lantus by mail in Canada after the US list price quadrupled in just over a decade. .

"I have a very bad opinion of companies like Sanofi," he said. "They could afford to sell it to me when he goes out" at a much lower price, he said. "The inflation was not 400%."

Due to the rebates paid to PBMs, Lantof's net price for Sanofi has actually decreased over the past five years, despite the rise in list prices, said company spokesman Florio. "Unfortunately, these savings are not systematically passed on to patients," he said.

PBMs say they meet the conditions proposed by pharmaceutical companies and negotiate to save billions for the government, insurers and employers. "In simple terms, the easiest way to reduce costs would be for pharmaceutical companies to lower their prices," the Pharmaceutical Care Management Association, the PBM lobby, said in a statement.

For its part, PhRMA, the association of branded drugs, said it wanted to remove the discount system and charge the PBM for the services provided.

Congress has done little to address the issue of discounts despite criticism, but lawmakers in both houses have pledged to fight high drug prices this year.

Last summer, the Department of Health and Social Services proposed to amend "safe harbor" type protections that prevent rebates granted to pharmaceutical companies from being considered illegal commissions. But the proposal, which has been under review in the Office of Management and Budget since July, has never been released publicly, which has led the industry to wonder how substantial it is and if it will ever come into effect .

Kaiser Health News (KHN) is a non-profit news service covering health issues. It is an independent editorial program of the Kaiser Family Foundation which is not affiliated with Kaiser Permanente.