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As pressure mounts to overhaul opaque pharmaceutical pricing, OptumRx, one of the largest U.S. pharmacy benefit managers, recently demanded that drug makers make significant changes toward rebates, but in a way that would largely bolster its own bottom line.

The move by the PBM — which is owned by UnitedHealth Group (UNH), the big health insurer — comes as the Trump administration and some drug makers seek to minimize, if not eliminate, the influence rebates have on drug prices. Pharmacy benefit managers collect rebates from drug companies in exchange for favorable placement on formularies, the lists of medicines that receive preferred coverage.

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  • Ed and Ike,
    The PBM’s have had a lot of time to figure out a way around this Drug Rebate cash cow that they’re gonna be loosing very soon. So the’ll call it a formulary fee or an administration fee or a bullshit fee ! The government MUST do away with List Price or what’s called AWP. Having this bogus number is exactly what the PBM’s want !! This allows the PBM’s to take the spread between AWP and actual cost. Here’s the facts in the pharmacy business guys. A patient can’t buy drugs from the manufacturer. Drugs are manufactured, then they are sold to a wholesaler for what’s called WAC (Wholesale Aquisition Cost).
    The wholesaler then sells it to the pharmacy , or the mailorder house( that the PBM owns).
    The government needs to firstly place some Fiduciary responsibilities on the PBM’s. Can you imagine , they interviewed
    someone from Express Scripts on 60 minutes recently , and this guy said that that it wasn’t their job to negotiate drug prices!
    The next thing the government MUST do is insist on transparency !!! There is no other business in the world like this !!
    These PBM’s administered the medicaid and medicare part D in lets say 20 states , and stole BILLIONS of dollars !
    When Ohio wanted to see the PBM’s books they sued the state. And the Judge gave into the PBM.
    In any event , these PBM’s must have laws to abide by….. Cause right now there are NONE !!!!!!

    • Jeff your have raised great points. We have to remember that PBMs put food on the table of legislatures. They would not spit in it. This has been the case state after state. PBM black box is impermeable. When Amazon, Berkshire Hathaway and JPMorgan Alliance was announced January 2018, guess who volunteered to manage drug distribution. Our beloved PBMs.

      Same drug has variable price under different plans. I did a comparison of few drugs. Table 1 in the linked compares some prices with and without insurance vs. price in India where the pharmacy is making 35% margin. Some of the drugs sold in US come from the same plants.

    • Hi Jeff,
      Thanks for the note. And yes, the fees, as proposed, could wind up being a kind of loophole.
      ed at pharmalot

  • This is called HIGHWAY ROBBERY in broad daylight. Shouldn’t they be doing something to contain costs. What happened to continuous improvement. No one be given free food. As they say nothing is free and FREE happens to be FOUR-LETTER word. We all know what that means.

    Where is FTC?

  • While sympathy for PBM’s is certainly out of fashion, it is also a fact that hey must file there plan designs well in advance of the coverage year – at least, enough that they can e reviewed, questioned and set. They certainly cannot turn ‘on a dime’ when pharma companies change prices. That said 7 quarters and a price guarantee sounds as excessive as, well …. prescription drug prices, wouldn’t you say?

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