Congress may be busy investigating Mylan and its EpiPen pricing, but that doesn’t mean its watchdog committees can’t turn a spotlight on pharmacy benefits managers, too.
After Mylan CEO Heather Bresch blamed PBMs for “incentivizing” price increases, pharmacists--including Rep. Buddy Carter, the only pharmacist in Congress--are calling for more scrutiny.
The National Community Pharmacists Association urged the House Committee on Oversight and Government Reform to investigate PBMs, which manage formularies and negotiate drug discounts for insurers. Mylan has said that PBM rebates account for almost half of EpiPen’s $600-plus list price.
The committee should convene a hearing to determine PBMs’ role in drug costs, association CEO B. Douglas Hoey said in a letter to Chair Jason Chaffetz. Nearly every EpiPen paid for by federally funded programs comes through PBMs, the letter states, “and we believe Congress should find out how big of a ‘chunk’ they are taking of the cost of the absurdly high epinephrine auto-injector that was focused on” during a hearing earlier this month.
Carter happens to be a member of the Oversight Committee, and during that hearing, he called for more transparency about drug pricing, citing the secretive nature of PBM rebate deals with drugmakers. Carter since has written a column for The Hill calling for accountability from PBMs, which he dubbed “the man behind the curtain” in drug pricing.
Pointing out that the three largest PBMs control about 78% of the market--and manage drug coverage for 180 million Americans--the letter said the companies “decide what the consumer will pay and what medications are covered, what the employer will be charged, and what the pharmacy will be paid.”
PBMs have been flexing their muscles in recent years, and their demands for discounts are putting a crimp on pharma sales, particularly in competitive fields such as diabetes. Behemoths Express Scripts and CVS Health recently published new exclusions on their formularies, following up on their vows to pit drugmakers against one another to bring down costs.
The PBMs say they’re a positive force in the healthcare world because they’re playing a part in holding down drug spending. For instance, the companies successfully pressed makers of pricey hepatitis C drugs--including Gilead Sciences and AbbVie--to offer rebates of an estimated 40% to 45% in return for formulary spots and broader access for patients. And because of payer pressure, net price increases on most drugs have slowed considerably, despite big increases in list prices.
But it’s not only Mylan that’s complaining about rebates creating perverse incentives for drugmakers and problems for patients. Pfizer CEO Ian Read recently said that, as PBMs started trading formulary placement for rebates, drugmakers cut deals so that they’d have access to patients.
“[I]deally those rebates are going back to lowering the co-pays,” Read said at the Wells Fargo Securities Healthcare Conference last month. “That’s not what’s happened. The rebates are being paid and the co-pays are going up.”
“I think we need better rules,” Read said.
Acorda Therapeutics CEO Ron Cohen told the Wall Street Journal this week that drugmakers have to put through bigger price hikes to achieve the actual increases it wants to drive sales growth--because they know some of that increase will go to PBMs in the form of rebates.
"So you get this pressure year after year that tends to escalate the price increases,” said Cohen, chairman of the trade group BIO.
PBM hardball, specialty med slowdown to curb 2017 healthcare spending jump
Mylan takes on punching-bag role again as Clinton aims to shame 'bad actors'
Mylan could face big Medicaid bill after underpaying EpiPen rebates, CMS says
Mylan CEO Bresch used a sky-high tax rate to lowball EpiPen profits by 66%
Lawmakers smack Mylan CEO Bresch for pay, plane and pricing at EpiPen hearing
Challengers eye a piece of EpiPen market as pricing scandal engulfs Mylan
Mylan likely to 'get credit' for new EpiPen generic, but is it too little, too late?