February 28, 2019

(Washington, D.C.) — The Pharmaceutical Care Management Association released the following statement on the Pennsylvania Auditor General’s report, “Bringing Transparency & Accountability to Drug Pricing:”

“The Pennsylvania Auditor General has released yet another biased report on pharmacy benefit managers (PBMs). The truth is PBMs advocate for consumers and health plan sponsors to keep prescription drugs accessible and affordable.

This report glaringly fails to acknowledge that drugmakers alone have the power to set prices for their products. Yet, the report relies on drugmakers’ explanation for setting and raising prices: ‘Without rebates, the list price of all drugs would drop by about 30 percent, drug manufacturers told us,’ the report states.

The report is factually wrong on the issue of prescription drug rebates negotiated by PBMs. Negotiating rebates from drug manufacturers is one important way PBMs control prescription drug costs. While manufacturers alone set drug prices, once those prices are set, PBMs leverage marketplace competition to negotiate rebates with manufacturers to reduce prescription drug costs for consumers. These savings are used to lower enrollee premiums and to keep down the cost that consumers pay at the pharmacy counter.

This holds true in Pennsylvania, where PBMs pass through to clients the significant majority of rebate dollars — and all rebate dollars in Pennsylvania Medicaid. In Pennsylvania, and elsewhere, plan sponsors regularly audit their contracts, including the terms involving drug manufacturer rebates.

Importantly, not all drugs dispensed are eligible for rebates. In fact, close to 90 percent of all drugs dispensed are generic drugs. In Medicare nearly 40 percent of branded drugs are not rebated, yet prices on those drugs also continue to increase.

Any proposal to limit or eliminate rebates – without a viable alternative – will result in program and patient costs spiking higher. Pennsylvania should not rely on the good faith of drug companies to lower list prices.”

See PCMA’s Letter to the Pennsylvania Auditor General

A number of recent analyses prove that PBM-negotiated rebates are not correlated to drug makers’ pricing strategies.

  • A recent study — Reconsidering Drug Prices, Rebates, and PBMs  — shows drug manufacturers alone set prices – independent of rebates.  The study highlights top-selling Medicare Part D brand-name drugs with steady price increases and no change in rebate levels over a five-year period from 2012 to 2017. In addition, the study analyzes a number of Medicare Part B drugs, which have no PBM rebates, and large price increases.
  • There is no correlation between increasing prices set by drugmakers and rebates. List prices for drugs increased faster than the rate of inflation with no consistent pattern to the changes in rebates.
  • A Medicare report by HHS Office of Inspector General (OIG) found that the number of brand-name drugs with rebates dropped from 72 percent to 61 percent.