Writing for The Hill, BIO’s President and CEO Jim Greenwood offered praise to the Senate Finance Committee for calling on pharmacy benefit managers (PBMs) to testify before Congress but also warned of their deceptive tactics aimed to bolster their bottom-lines.
“PBMs were originally conceived to help employers and insurers negotiate the best prices on prescription drugs, a fine idea in a market-based health care system like ours. But massive industry consolidation has fundamentally changed the way they do business. In private, PBMs ask biopharma companies to preserve high list prices and write them larger rebate checks in exchange for prime formulary placement. In public, these middlemen castigate drug companies for high prices while laughing all the way to the bank.”
The primary role of a PBM is to determine which medications get placed on insurance formularies and how much patients pay out of pocket for the drugs they need. However, their allegiance to their shareholders and the health insurers who hire or own them has come at the expense of patients looking for relief at the pharmacy counter.
“PBMs’ status as all-powerful gatekeepers of the American medicine cabinet has allowed them to game the pharmaceutical rebate system for years. They are under no legal obligation to use a manufacturers’ rebate to lower patients’ out-of-pocket drug costs. Middlemen can keep that money as profit. Most insurers say they use the rebate money to lower overall premiums instead of drug bills, perpetuating a morally dubious financing system where the sick subsidize the well. Meanwhile, patients’ out-of-pocket costs are typically calculated off the list prices that PBMs work to keep artificially high.”
The Trump administration is moving in the right direction by proposing policies that would help eliminate these perverse incentives and require all manufacturers’ rebates to be passed on directly to beneficiaries under Medicare Part D.
“If properly implemented, the rebate rule can start to close the confusing gap between a drug’s net and list price. List price increases have long been weaponized by industry critics in the media to suggest biopharma companies are greedy profiteers, when it is PBMs that insist innovators preserve high list prices and high rebate checks, or else.”
For more, read the full op-ed in The Hill here.