On April 9, a congressional hearing will explore the impact of pharmacy benefit managers on high drug prices. It’s a connection that many heart patients have learned firsthand.
For years, patients prescribed innovative PCSK9 inhibitors to lower stubborn, genetic or dangerously high cholesterol have been rejected by their health plans. Then something remarkable happened. Both manufacturers of PCSK9 inhibitors slashed their drug’s price by 60 percent.
Yet high-risk patients who meet coverage criteria are still getting denied. And patients who are lucky enough to be approved aren’t necessarily benefitting from the lower prices. Why? Perhaps because the middlemen who control prescription drug plans can actually make bigger profits when a drug’s price is high.
Price discounts should result in PCSK9 inhibitors being moved to a lower tier on health plan formularies. Rather than being on a specialty tier, where patients may have to pay as much as 25 or 30 percent of the list price, the drugs should be moved to a lower tier that requires only a modest, flat co-payment.
But pharmacy benefit managers like Express Scripts have failed to make that change. In fact, Inside Health Policy reported that 56 percent of Medicare beneficiaries still must access the drug on a specialty tier, paying hundreds of dollars each month – or more – for their medicine. Higher out-of-pocket costs are associated with decreased adherence, meaning some patients may have to walk away from the very medicine that reduces their risk of heart attack, stroke and death.
Express Scripts’ spokesman said the company was waiting on “clarity” from the Centers for Medicare and Medicaid Services about what to do.
Bureaucratic red tape may be real. But so are profits. More expensive drugs can generate higher earnings for pharmacy benefit managers, who negotiate with manufacturers for a rebate that is a percentage of the drug’s list price. The higher the list price, the more dollars delivered to the pharmacy benefit manager. A 60-percent price reduction, on the other hand, could equal a financial loss for the infamous middlemen.
The perverse incentives at play illustrate larger issues with the rebate system and pharmacy benefit mangers’ role in drug pricing and patient access. What’s a matter of dollars and cents for pharmacy benefit managers is a matter of life and health for patients.
To examine the issue, the U.S. Senate’s April 9 hearing will feature testimony from the executives of five major pharmacy benefit managers: Cigna, CVS, Humana, OptumRx and Prime Therapeutics. In a joint statement, Finance Committee Chairman Chuck Grassley (R-Iowa) and ranking member Ron Wyden (R-Ore.) said, “Middlemen in the health care industry owe patients and taxpayers an explanation of their role. There’s far too much bureaucracy and too little transparency getting in the way of affordable, quality health care.”
The hearing comes on the heels of a February proposal from the Department of Health and Human Services suggesting that the prescription drug rebate system used by Medicare and Medicaid should be replaced by direct discounts to list prices and patients.