Last month, the IQVIA Institute held a webinar, “The Use of Medicines in the U.S. 2023.”

Panelists highlighted how big drug companies set the price of the drugs they create and have the power to lower costs, as well as the various actors at play in the prescription drug supply chain, including pharmacy benefit companies who are critical in lowering prescription drug costs.

Kristin Bass, chief policy and external affairs officer at the Pharmaceutical Care Management Association (PCMA), explained how pharmacy benefit companies negotiate with drug companies for rebates, the vast majority of which are passed directly to the plan sponsor who uses them to benefit their beneficiaries, i.e., the patients.

Bass also highlighted how plan sponsors hire pharmacy benefit companies to provide employers, including small businesses, a variety of coverage choices and flexibility that help them provide affordable, quality prescription drug coverage. She said:

“PBMs are hired by plan sponsors and insurers who are trying to compete for business…to bring down the cost of prescription drugs…The manufacturers’ launch prices, as was said earlier, are coming in at $300 grand a year on average…In Medicare, 99.6 percent of the rebates go back to the plan sponsor, which has to use them for the benefit of the beneficiary. In the commercial market, plan sponsors typically increasingly require 100 percent of the rebates to go to them. So, this idea that there’s this nefarious scheme that PBMs are keeping all of the money is just not true…

“[Pharmacy benefit companies] compete based…on scale, some compete based on services — our companies increasingly provide clinical services that payers like. Sometimes they just compete on pure service to the payer itself…So, there’s a lot of competition in the PBM world, and I think it gets lost in the conversation about the consolidation.”

Walid Gellad, MD, MPH, professor of medicine and director at the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh highlighted how prescription drug launch prices, which are set by big drug companies, have increased, and how there are no mechanisms in place to reign in out-of-control launch prices. He said:

“The median annual cost of treatment at launch, and for non-oncologic orphan drugs, were up to $300,000, median cost at launch. There is no mechanism yet, we have not found a mechanism in public policy to address that particular issue of drug pricing…there is no mechanism to address that rising trend in launch prices.”  

As lawmakers in Washington examine drug pricing legislation in the coming weeks, it’s important that legislation focuses on encouraging competition and addresses the root cause of high drug prices – anti-competitive practices utilized by big drug companies and their increasingly high list prices. Lawmakers should avoid misguided legislation that targets pharmacy benefit companies, which plan sponsors, including employers, and hundreds of millions of Americans rely on to make prescription drugs more affordable and accessible.

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Learn more about public policy solutions that would promote competition in the prescription drug market and effectively lower prices for patients HERE.

Learn more about the critical role of pharmacy benefit companies and how Big Pharma’s egregious practices are the root cause of high drug prices HERE.

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PCMA is the national association representing America’s pharmacy benefit companies. Pharmacy benefit companies are working every day to secure savings, enable better health outcomes, and support access to quality prescription drug coverage for more than 275 million patients. Learn more at www.pcmanet.org