In a sharply worded letter, two lawmakers are challenging Health and Human Services Secretary Alex Azar over his recent comments about drug makers and their insistence that pharmacy benefit managers and distributors were making it difficult to lower prices.
The missive was sent in response to testimony Azar gave two months ago at two different Senate committee hearings, in which he described how drug makers contacted by the Trump administration expressed willingness to lower prices, but claimed they were thwarted by various middleman in the pharmaceutical chain.
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No question, there is more than enough blame to go around. Phrma has played the rebate/fee game well to assure preferred placement on formularies and keep competitors off. But there is no question that every 6 months to a year PBMs play the medication musical chair game (change the formulary) based on which company put in the highest bid which is based on list price and market share.
If you want to keep the preferred spot on formulary (patients must take these drugs first) your bid based on list price, %discount, market share, and fees (based on list price) must be the highest. The variable that is the easiest to manipulate upward is the list price. Fees have taken over as the cash cow now that the word is out on rebates.
Both are to blame it’s just that PBMs seem to have the upper hand right now because the big 3 control nearly 80% of the US population. If your drug (particularly specialty drug) isn’t on formulary no one will take it. So bid high if you want to remain on formulary.
A very lucid and succinct autopsy Dr. Feldman. I admire your insight and ability to break down something so byzantine so simply and clearly. Well said and kudos.