PBMs Must Pass On – Not Pocket – Drug-Price Savings
Some pharmaceutical companies have recently cut the costs of name-brand drugs and offered discounted generics, but those savings are often not reaching consumers. Instead, the savings are being pocketed as inflated profits by PBMs (pharmacy benefit managers). The Senate Finance Committee’s hearing earlier this week pressed executives from PBMs to explain why they are not passing on savings from lower drug prices to consumers, but more must be done to ensure this type of activity does not go unchecked.
More than 80 percent of pharmaceuticals in the US are purchased through PBMs, which are virtually drowning in cash in the form of rebates. These rebates have tripled to $170 billion between 2012 and 2018. Despite this money-surge, though, ever-smaller portions of those rebates are being passed on to consumers. And that means that fewer and fewer people can afford their medication, medication that can literally mean the difference between life and death.
Some people are especially vulnerable. People with low incomes and those who are uninsured, underinsured, or must pay for all or part of their medications out of pocket are most directly hurt by the greed of PBMs. Latinos and Hispanics, who are at higher than average risk of some diseases, including cardiovascular disease and type 2 diabetes, are often among those who must choose between food and medicine because they can’t afford their prescriptions.
Recently, some manufacturers reduced list prices of PCSK9 inhibitors – cutting-edge cholesterol-lowering drugs that can help prevent heart attacks and strokes. This should have been welcome news for patients with cardiovascular disease.
Unfortunately, one PBM, CVS Caremark, is evidently preventing doctors from prescribing the lower-priced version of the PCSK9 inhibitor Repatha to patients. CVS Caremark has given no reason for the decision, other than to tell physicians that the lower-priced version of the drug is “unavailable.” This is unconscionable.
Those with type-2 diabetes who can’t afford insulin are in similarly dire straits. In order to make insulin accessible to those patients, Eli Lilly recently announced the launch of a half-priced, authorized generic version of its top-selling insulin, Humalog. If PBMs do the right thing, the lower-priced insulin will be made available to the patients who need it.
That’s why we need transparency. Consumers and taxpayers are entitled to know what their options are and what they’re paying for. They’re entitled to a sound and honest reason, as well as a reasonable alternative, when they’re told that an affordable, potentially lifesaving medication is unavailable. Transparency requires regulation, and regulation requires legislation. The Trump administration has pledged to lower prescription drug costs, and one senator, Mike Braun (R-Ind), has proposed legislation to force PBMs to pass savings on to consumers. The proposed Drug Price Transparency Act would keep PBMs from lining their pockets at the expense of Americans’ health by ensuring that patients pay the price that PBMs negotiate, not a higher one. This proposed legislation is not the only solution; but it’s just one possible remedy.
It’s time for lawmakers to step up and stop the free-for-all by enacting policies that will require PBMs to be transparent, accountable, and to ensure that they do pass drug-price savings on to consumers. The hearing held earlier this week by the Senate Finance Committee scrutinizing PBMs is a start, but more can be done to help vulnerable populations that could benefit from drug price reductions.
Hector Barreto is the Chairman of The Latino Coalition.