The White Paper examines the efforts of payers to manage drug markups by implementing white bagging and brown bagging policies to shift the drug purchasing channel from providers to specialty pharmacies, as well as site of service policies requiring patients to receive treatment at lower-cost sites of care. 

The Paper examines the existing evidence and conflicting positions of payers and provider groups on how these policies affect patient safety, equitable access to care, and overall costs in the healthcare system.  Potential best practices and associated policy reforms are examined for their relative advantages and possible unintended consequences.

Date of publication: April 2023

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Final Documents

ICER’s President Steven Pearson, MD, MSc stated:

“The high cost of specialty pharmaceuticals can now be seen driving change across the health care system. Provider markup is one link in the complex chain that can lead to unnecessarily high costs.  Payers therefore have both a business interest and a stewardship responsibility to try to wring out unnecessary markup costs, and so it is no surprise that they have been increasing their efforts to move where possible away from the ‘buy-and-bill‘ system that has been the bedrock of reimbursement for many specialty drugs and is at the root of high provider markup costs. 

White bagging, brown bagging policies, and site of service policies are all part of this effort.  There are approaches to the design and implementation of these policies that are more likely to reduce markup while being mindful of the risk for patient harm that include serious concerns about disproportionate effects for people in disadvantaged communities.  Sound business practice and policymaking should aim to balance possible savings from reducing markup with thoughtful consumer protections and measures to improve transparency that can address the challenges that these policies may create for seriously ill patients.”