New Research: Drug Manufacturers Undermine Rx Cost Savings Tools, Increase Drug Costs

(Washington, D.C.) — A new white paper, “Solving America’s High Drug Cost Problem: Prevent Drug Company Tactics that Increase Costs and Undermine Clinical Quality,” by the Pharmacy Benefit Management Institute (PBMI), released today by the Pharmaceutical Care Management Association (PCMA), outlines ways that some drug manufacturers undermine formulary and utilization management tools, resulting in higher drug costs for health plan sponsors and patients.

“PBMI’s assessment of the ways drug manufacturers may try to subvert proven cost-saving tools from pharmacy benefit managers (PBMs) is especially relevant as the incoming Biden Administration reviews the current Administration’s misguided rebate rule,” said PCMA President and CEO JC Scott. “This white paper makes it clear that while PBMs work to keep prescription drugs affordable and accessible, counter-efforts to get patients to take more expensive drugs, especially when there are less expensive alternatives, drive up costs for all consumers.”

Key highlights from the new research include:

Drug formularies are an important tool used by PBMs to lower prescription drug costs for patients and health plan sponsors. A formulary is a continually updated list of prescription drugs approved for reimbursement by the PBM’s payer clients. In coordination with clinical experts, PBMs typically develop a recommended formulary for payers, who may customize it. Prescription drug formularies give patients financial incentives to use the most clinically effective and cost-effective generic and brand drugs.

Drug manufacturers use prescription drug copay coupons to bypass the clinically driven formulary processes and step therapy tools that PBMs use to safeguard utilization management and to increase utilization of more expensive drugs. “Drug company coupon programs are most often available for branded drugs that have lower-cost alternatives available on the market and will likely not qualify for favorable formulary placement,” according to the PBMI white paper.

PBMs have reduced prescription drug costs and have a return on investment for payers of $10 for every $1 spent on PBM services. Rising drug prices, especially for new specialty medications, and the tactics used by drug manufacturers threaten the financial viability of health coverage, the paper states.