PBMs tell US Senate hearing that pharmaceutical companies to blame for high drug prices

Executives representing pharmacy benefit managers (PBMs) who testified before the US Senate Finance Committee on Tuesday were asked why they cannot do more to control prescription drug prices and to divulge details behind the contracts they negotiate. The latest hearing, which included testimony from executives at CVS Health, Prime Therapeutics, Humana, UnitedHealth Group's OptumRx unit and Express Scripts parent Cigna, follows another held in February during which executives at seven pharmaceutical companies attempted to place much of the blame for high drug prices on PBMs and insurers. 

Senator Ron Wyden stated "bottom line, PBMs are middlemen who strike deals with drugmakers in secret. In my experience that kind of negotiation rarely results in an act of charity for consumers." He also said "whether [PBMs] bring any real value to taxpayers is a mystery." 

However, William Fleming, president of healthcare services at Humana, stated that "a major factor contributing to the increase in drug spending is the list price of prescription drugs." He noted that "drug manufacturers alone set the list price of prescription drugs," and that they "raise list prices to boost their revenue." According to Fleming, only 255 of the drugs covered in Medicare had rebates in 2019, or about 7 percent of all the drugs covered under Humana's Medicare plans. 

In the hearing, CVS described rebates as "a powerful tool used to offset" high list prices set by pharmaceutical companies. PBM executives also criticised drugmakers for the increasing prices of brand-name products, citing the soaring cost of insulin, which jumped from $2900 in 2012 to $5700 in 2016. Further, they pointed to the rising cost of specialty drugs, which they predict will account for about half of all drug costs by 2022, despite currently being used by only 2 percent of patients. The PBMs also urged that pharmaceutical companies enter into more value-based pricing agreements under which drug costs are linked to efficacy.  

Meanwhile, Fleming suggested that a recent Health and Human Services proposal to issue rebates directly to patients would lead to 17 percent of Medicare beneficiaries seeing savings at the pharmacy counter as a result of rebates being passed through there, while 12 percent would save more than $70 annually. However, he estimated that the new rebate rule would result in higher premiums for 83 percent of patients. The Pharmaceutical Care Management Association agreed, stating that the proposal would significantly increase premiums "for all [Medicare] Part D beneficiaries, raising taxpayer costs for the programme and destabilising Medicare Part D." 

PBM executives cited certain anti-competitive strategies employed by drugmakers that promote higher prices, such as "pay-for-delay" agreements that slow generic drug launches. They also criticised the pharmaceutical industry for "evergreening" tactics that prolong patent protection, calling for reductions in the duration of market exclusivity for both branded and specialty drugs. 

Meanwhile, Wyden and Senate Finance Chairman Chuck Grassley asked the inspector general to examine the practice of "spread pricing." Wyden stated that "PBMs are paying one set price to pharmacies for a particular drug, but they're turning around and charging Medicaid and other healthcare payers far more for that same prescription."

Cigna and CVS, which practice spread pricing, as well as Humana, which said it only did it for one type of plan, stated that they would support a legislative ban on the practice. UnitedHealth only offers the option for spread pricing to its commercial plans, while Prime does not practice spread pricing. OptumRx indicated it would be neutral towards a ban, while interim Prime president and CEO Mike Kolar stated that he would not oppose such legislation. 

The hearing comes after bills targeting drug pricing were unveiled by US lawmakers earlier this year. Grassley and Wyden have also launched a probe into pricing for insulin, targeting Eli Lilly, Novo Nordisk and Sanofi. 

Register as Visitor to CPhI China 2019!

-----------------------------------------------------------------------
Editor's Note:

To apply for becoming a contributor of En-CPhI.cn,

welcome to send your CV and sample works to us,

Email: Julia.Zhang@ubmsinoexpo.com.