The Pharmacy Benefit Brief | November 2020

Welcome to the Pharmacy Benefit Brief. This brief is your monthly snapshot of news from America’s prescription drug supply chain including pharmacy benefit managers, independent pharmacies, and drug manufacturers.

Pandemic Vaccine: Safety Top Priority for Rx Supply Chain…

As states grapple with the daunting task of rolling out a plan to administer and track COVID-19 vaccine recipients in their local communities, the pharmaceutical supply and payment chain, which includes pharmacy benefit managers (PBMs), drug manufacturers, pharmacies, wholesalers, among others recently came together to issue guiding principles for a safe and efficacious distribution.

These guidelines are aimed at helping policymakers and healthcare professionals create standards for things like identifying priority populations, communicating evidence of effectiveness, and the importance of monitoring for any health problems associated with vaccines for COVID-19.

The issuance of these principles is the latest example of how the pharmaceutical supply and payment chain has remained a stable force during the pandemic, helping patients access their medications on time.


Big Pharma’s Version of Leapfrog…

We’ve highlighted a couple examples of Big Pharma setting and raising drug prices. Sometimes it’s as simple as raising the prices of insulin a couple times a year. This month, we’re showing a Big Pharma tactic that often is hard to see — it’s a little-known tactic called “product hopping,” which happens when a drug manufacturer with a drug nearing the end of its patent protection works to move patients to a reformulation of their drug that has longer patent exclusivity. Product hopping deliberately subverts the cost-reducing tools used by PBMs. Product hopping delays the entry of generic competition, and limits usage of lower-cost generic alternative drugs, resulting in billions of dollars in higher drug costs for American patients.

There have been five instances of product hopping on drugs that treat things like high cholesterol, reflux, and acne for example. Together, these patent extensions have cost the U.S. health care system nearly $5 billion dollars annually. A new report, The Cost of Brand Drug Product Hopping, outlines the dramatic impact of Big Pharma’s product hopping.

“Brand drug manufacturers in the United States have developed strategies to thwart generic competition and preserve monopoly profits longer than policymakers intended. In doing so, they cost US patients and healthcare payors billions of dollars. This report focuses on one strategy known as product hopping that brand drug companies use to prevent generic competition and extend their monopoly prices. The analysis presented in this paper finds that just five instances of specific product hops cost the US healthcare system $4.7 billion annually.”

Want to learn more about what PBMs do, have a listen to The Pharmacy Benefit podcast.

This episode features interviews with Humana executives who explain how PBMs use data and behavioral science to better identify emerging patient conditions and drug needs.

“Low cost interventions that are informed by real time data can have enormous impacts on millions of people…I think you want your government and your organizations to be as data driven as possible in informing program design as possible.”

“We probably all understand right now social determents of health and health equity just is paramount for all of us and we need to double down on some of those efforts.”–Mona Siddiqui, Senior Vice President, Clinical Strategy and Quality, Humana


Did you Know?

Pharmacy Benefit Managers, PBMs, save health plans and patients 40%-50% on their annual prescription drug and related medical costs compared to what they would have spent without PBMs.

It’s true, read Visante’s “Return on Investment on PBM Services,” for more interesting information on PBMs.


The Latest in Rx News
  1. Buffalo News: Pharmacy Benefit Managers Keep Prices in Check
  2. Inside Sources: Eliminating Medicare Part D Rebates Won’t Reduce Drug Prices. Holding Big Pharma Accountable Will

What is a PBM? Watch the short video here.