Every policymaker in America, on both sides of the aisle, wants to lower prescription drug costs. There is a basic understanding that drug costs are too high for some patients. How to lower drug costs is equally basic: the drug companies that set the prices should lower those prices. Unfortunately, drug companies have succeeded at muddying the path to achieving this universally shared objective.
It’s time to speak very clearly about our position on drug prices: America’s pharmacy benefit managers (PBMs) support lower prices for all prescription drugs – for all patients.
Why would I even have to say that PBMs support and want lower drug prices? After all, PBMs celebrated when certain drug companies brought down the prices of treatments for weight loss and diabetes. And the primary mission of any PBM is to lower prescription drug costs for employers, health plans, unions, public health programs, and ultimately, patients. To that end, PBMs deliver, lowering drug costs for employers and patients by $1,154 per person each year.
The fact is that drug companies set the price of prescription drugs — and the price is the problem when it comes to Americans facing difficulty affording their medications.
Americans are paying the highest prices in the world when it comes to prescriptions – and that’s not right. Across brand drugs, pharma list prices are 422 percent higher in the U.S. than in other countries.
I’m reminded of comments from Dr. Rena Conti of Boston University during a recent congressional hearing, “Drug prices are set high in the United States because, simply, drug manufacturers can charge them, and we will pay them.”
Unfortunately, drug companies have made it their mission to deflect attention away from their sticker prices and the affordability challenge that they have created, using heavily funded advocacy campaigns to confuse the debate in Washington and state legislatures. They’ve turned policymakers’ attention largely away from their price tags and to the one industry that is a check on their pricing power: PBMs.
In case anyone has managed to tune out the brand-name drug industry’s interminable advertisements in print and on the airwaves, a recent Wall Street Journal article surmised their agenda, tactics, and objective perfectly.
While I may take issue with at least part of the headline, “Drugmakers Have Spent Millions Targeting ‘Middlemen’ – and it’s Paying Off,” it has validity.
For years, Congress has singled out PBMs, holding nearly 20 hearings while calling on drug companies only a handful of times to explain their prices and business practices. At the state level, lawmakers have introduced more than 1,400 bills targeting PBMs just this year. So, one might say the drugmakers’ campaigns to deflect attention away from prices are, indeed, as the headline suggests, working.
Enough is simply enough. PBMs don’t set drug prices and certainly are not forcing drug companies to set or keep high prices. Drug companies set the price, decide when to increase the price, block competition to keep the price high, and spend billions of dollars in advertising to promote high-priced products to consumers – dollars that come with a tax write-off that costs taxpayers more than $1 billion annually.
Rising drug prices limit our ability to effectively secure savings to address the affordability challenge that some patients face. The sticker price is the starting point for all PBM and drug company negotiations – and often the basis for cost-sharing obligations. A lower sticker price means employers, unions, plan sponsors, and most importantly, patients, will pay less.
There are policy routes that will lead to lower drug prices. The most sure-fire being policies that increase competition among brand-name drug companies. Recently, the Senate Judiciary Committee advanced bipartisan legislation aimed at breaking the patent thickets that slow to a crawl any generic and biosimilar competition from entering the market to compete with brand-drug counterparts.
The House Ways and Means Subcommittee on Health also recently held a hearing focused on encouraging a more robust biosimilar marketplace in the country to increase competition to drive down prescription drug costs.
These actions by Congress show that there are places in our current prescription drug marketplace that lack competition, and in order to encourage greater competition, we need to address the root of the problem.
While Big Pharma lobbies for a self-serving agenda designed to keep drug prices high, boost their profits and hike health care costs, PBMs are rapidly evolving in the market to meet the demands of patients and health plan sponsors – helping employers and unions offer competitive, transparent pharmacy benefits, while giving patients more convenient access to prescription drugs and lowering their out-of-pocket costs.
Despite this positive progress already happening in the marketplace, the problem of high prescription drug prices in our country has always stemmed from the list price that’s set by drug companies, and without addressing the list price, prescription drug affordability will remain a challenge.
That’s why PBMs and the American people are calling on drug companies to do one thing: Lower the List Price. Will they answer the call?
