Drug Prices? Not My Fault, Say PBMs and Pharma
Don’t look at me! That’s basically how it went at a U.S. Senate hearing Wednesday. Top executives from PBMs (pharmacy benefit managers) and the three pharma companies selling insulin testified to suggest they’re doing everything they possibly can to keep drug prices low. PBMs point the finger at pharma. Pharma executives return the favor.
Lilly CEO David Ricks explained that PBMs prefer higher list prices that leave room for big rebates and fees:
“Higher list prices allow for higher fees and rebates, which can increase patients’ out-of-pocket costs while benefiting employers, insurance companies, and people who don’t use the medicines.”
David Joyner countered that “government study after government study has concluded that price increases are not the result of rebates or discounts.”
A Deeply Flawed System
It is clear enough though, that all of these businesses are working within a deeply flawed system. Novo Nordisk CEO Lars Fruergaard Jørgensen summed it up pretty well:
“The complexity of the system makes it a flawed system, where patients are not getting the benefit. We should really focus on the patient – what happens at the counter for the patient. If they have insurance with a high deductible and end up paying a list price, that’s a big issue. That’s the story I hear from many patients. They are in a very tough situation.”
Drug Pricing Bills Progressing
At the end of the day, change is coming on drug pricing – however flawed and confusing it might be. Scrutiny of Pharma and PBMs on drug prices will continue to be intense. Four bills aimed at lowering prescription drug costs won overwhelming support from the committee holding this hearing, the Senate Health, Education, Labor, and Pensions Committee. Republican Senator Bill Cassidy made it clear that support for this legislation is bipartisan:
“We’re here to lower health-care costs, to improve access to the best possible care for fellow Americans, and the legislation we’re considering today to reform the rules that govern PBMs and generic drugs does that,”
You can be sure that the pressure on drug pricing will continue. Pressure on pricing for obesity drugs will grow as competition grows, patents expire, and utilization increase. In the hearing, Jørgensen testified that prices are already declining for semaglutide. But it’s not at all clear that out of pocket costs for patients are going down yet.
We will be watching for progress, but remain skeptical that it will come quickly. Money talks, even when health is at stake. Even when it shouldn’t talk so loudly.
Click here, here, and here to read more about the hearing, here if you care to watch it. For more detail on the legislation that passed through committee, click here and here. For more on the murky business model of PBMs, click here.
Pointing at Them, photograph by Hubert Figuière, licensed under CC BY-SA 2.0; Sculpture by Raymond Mason, The Illuminated Crowd
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May 12, 2023
