Recently, several of the largest pharmaceutical manufacturers explained how pharmacy benefit managers (PBMs) are lowering prescription drug costs, specifically the highly priced GLP-1 weight loss drugs.

Billions of dollars in direct-to-consumer and direct-to-physician advertising spending by drug companies have contributed to exploding demand for GLP-1 drugs. Between early 2020 and the end of 2022, GLP-1 prescriptions increased by 300 percent and new prescriptions for GLP-1s in 2024 are up 181 percent compared to 2022.

The statements from drug companies clearly show that PBMs are doing their jobs to secure savings on prescription drugs and passing those savings to health plans and patients.

Drug company statements on PBMs’ work to lower GLP-1 costs: 

Novo Nordisk reported weaker-than-expected net profits on their blockbuster GLP-1 weight-loss drug due to greater PBM-secured savings and competition in the marketplace. CNBC reported on this as a major takeaway for financial analyst Jim Cramer on Novo Nordisk’s earnings report:  

“Novo Nordisk posted disappointing earnings results before the bell. The company reported a weaker-than-expected net profit in the second quarter, and missed expectations for sales on its weight-loss drug Wegovy … However, Novo Nordisk’s sales miss was the result of higher-than-expected concessions to U.S. pharmacy benefit managers — not by softening demand for its drugs.” 

During Johnson & Johnson’s (J&J) Q2 earnings call, Joseph Wolk, Chief Financial Officer, highlighted that drug companies have been forced to provide greater rebates or price concessions, due to PBMs negotiating with drug companies on behalf of health plan sponsors. In other words, PBMs are doing their job:

“Discounts and rebates six years ago as compared to list price was only about 25% of that list price. Today, that number — and this is not just the J&J number, but an industry number, gravitates toward 60%.” 

And as PBMs secure significant savings on high-priced GLP-1 weight loss drugs, Gordon Brooks, Group Vice President, Controller & Corporate Strategy and Interim Chief Financial Officer of Eli Lilly, highlighted how more employers are choosing to cover them. This underscores the critical role PBMs are playing helping health plan sponsors navigate these high-priced products, balancing access and cost, and making decisions to cover them possible through negotiated savings. 

“We are rapidly building our formulary coverage for Zepbound in the U.S. and as of July 1 had approximately 86% access in the commercial segment. We estimate over 50% of employers have opted into anti-obesity medicine coverage and see that modestly growing as we work to expand coverage.” 

And while Big Pharma reminds everyone that PBMs are effective in securing significant savings through rebates, it’s critical to remember these savings are overwhelmingly passed to plan sponsors leading to lower premiums and cost sharing for patients.  

During a U.S. Senate Health, Education, Labor and Pensions (HELP) Committee hearing, three pharmacy benefit company executives confirmed they pass on the vast majority of rebates in their testimony.

David Joyner, Executive Vice President, CVS Health and President, CVS Caremark:

“Today, we pass more than 98 percent of all the rebates back to our clients. We also provide them with regular detailed updates on drug spending and utilization, prescription claims process, cost savings achieved and also the manufacturer rebates that we receive.”

Heather Cianfrocco, Chief Executive Officer, Optum Rx at UnitedHealth Group:

“Overall, we deliver, on average, $1,600 in annual drug savings per person to our customers. 98 percent of our negotiated discounts passed directly to our customers, and they use these discounts to help reduce premiums, to provide point-of-sale savings and to invest in health and wellness programs.”

Adam Kautzner, President, Express Scripts:

“Rebates have been characterized by some as the mechanism for increase in list prices and thus increase in cost for patients. This claim is false, rebates are discounts we negotiate to lower prices. More than 95 percent of our rebates are passed to Express Scripts clients, which benefits Americans in the form of lower premiums, reduced out-of-pocket costs and expanded coverage.”

In addition, a recent report from Dennis W. Carlton, Ph.D., David McDaniel Keller Professor of Economics Emeritus at the University of Chicago Booth School of Business, concluded that the data on rebates and list prices show that list prices of rebated branded drugs are not systematically increasing at a higher rate than list prices of non-rebated branded drugs. The data also show that the real net price paid by plan sponsors and members for rebated branded drugs declined 13 percent between 2017-2021 while the real net price paid for non-rebated branded drugs increased six percent.

While Big Pharma continues to push lawmakers to pass misguided policies to undermine PBMs and the tools they use to drive down costs, the financial analysts and earnings reports from some of the most powerful drug companies show that PBMs are effective in leveraging scale to negotiate with drug companies to lower costs for patients and families.

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