As public anger increases over skyrocketing prescription drug prices, one of the nation’s largest pharmacy benefit managers (PBMs) announced a plan it says will help lower patients' out-of-pocket costs. It also aims to move away from the practice of rebates criticized for helping to push up the price of prescription drugs.
The Trump administration has criticized the practice of rebates -- reimbursements paid by drugmakers to PBMs and insurers -- with Health and Human Services Secretary Alex Azar suggesting ending the rebate system entirely.
FDA Commissioner Scott Gottlieb has said the “system of rebates between payers and manufacturers” drives up drug costs. And when he announced his drug pricing blueprint in May, President Trump decried the “dishonest double-dealing that allows the middleman to pocket rebates and discounts that should be passed on to consumers and patients."
Express Scripts announced last week a new "formulary," or list of covered drugs, that will favor lower-cost generic versions of the drugs rather than expensive, branded versions. Now its clients, including both health insurers and employer plans, can choose between lists that include drugs with a high list price -- and high rebate to PBMs like Express Scripts -- or the new list with lower-price drugs but with little or no rebate. Experts say the plan sheds some light on a complicated system of negotiations and has the potential to benefit some patients, though it’s less clear how wide the impact will be and whether it will be successful.
Under the current model, drug manufacturers set a list price for their medications and negotiate a rebate off that price with PBMs in exchange for having their medicines placed on a list of covered and preferred medicines. Experts say it’s not always clear who gets the rebate, but part of it goes to employers or insurance companies while PBMs also keep a percentage. This model leads to higher costs for patients as drugmakers increase list prices to offset the cost of rebates.
Steve Miller, the Express Scripts chief medical officer, said the system “used to work very well.” But as prices got higher, it became “one of the hottest controversies in pharmacy.”
“We wanted to imagine a world where what if we got rid of those exaggerated prices, and just got the drug companies to come out with a low price?” he told me in an interview. “If a pharmaceutical company will come out with sometimes the exact same drug but at a low price, we’ll advantage them on this new formulary. So especially for those with high-deductible health plans, those who are uninsured, those who have coinsurance, they will have a great option in the marketplace that really lowers their out-of-pocket.”
Experts say the plan could benefit patients who currently pay coinsurance based on a percentage of a drug's list price. If the covered drugs have lower list prices to begin with, that could mean lower costs at the pharmacy counter for patients.
Richard G. Frank, a professor of health economics at Harvard Medical School, said the move is significant because it develops an alternative to the rebate system. Express Scripts says it will still allow for rebates through other lists for payers that prefer the current system.
“We’ve been locked in this debate where every party points to the other party as the reason behind drug prices being high for consumers,” Frank said. “And certainly one of the issues that’s come up is the difference between list prices and transaction prices... And then you’ve got as a result of that people proposing to end the rebate system or change the rebate system.”
Lindsay Bealor Greenleaf, director at health-care consulting firm ADVI, said it’s clear Express Scripts is responding to pressure from policymakers.
“This announcement aligns with the direction things are headed in Washington -- of policymakers rethinking the role played by rebates,” Greenleaf said. “This is a proactive step to get prepared for a new environment that will change up their business.”
Miller acknowledged the company’s plan is an answer to the Trump administration’s calls for a change.
“When [Trump] did his Rose Garden address in the spring, the problems that have been created by high rebates were identified by the president,” Miller said. “This was an idea we responded with.”
“It’s not going to be a silver bullet, it’s not going to fix high drug prices in the United States, but it’s a step in the right direction," he added.
Greenleaf said other PBMs could follow suit. “Anytime Express Scripts or Optum or CVS change the way they do business, the rest of the industry certainly takes note,” she said.
JC Scott, president of the Pharmaceutical Care Management Association, the lobbying group for PBMs, commended the move. “This innovative formulary design again demonstrates how PBMs respond to client needs in the marketplace and deliver quality and affordable benefits,” Scott said in a statement.
Meanwhile, Holly Campbell, a spokeswoman for PhRMA, the pharmaceutical industry's biggest lobbying group, said the announcement is "important," but she still pointed fingers at other middlemen in the drug-pricing process.
“Express Script’s announcement is an important step toward addressing market distortions that result from middlemen profiting from the billions in rebates, fees and other discounts that they negotiate with biopharmaceutical companies, rather than sharing those savings directly with patients,” she said.
Greenleaf said it remains to be seen whether health-plan sponsors take advantage of the new lists.
“There are a lot of payers that enjoy receiving the rebates, and payers will often tell you they are using these rebates to keep their premiums low for enrollees. The truth is no one ever really knows the full extent of what the rebates are being used for because there’s a black box,” she said. “But to the extent that some payers do enjoy rebates to keep for themselves or to keep premiums down, those types of payers might decide this isn’t something they want to take part in right now.”
And Kay Morgan, vice president of drug information at information analytics firm Elsevier, said Express Scripts is inserting some transparency into the drug-pricing process by explicitly saying it will favor lower-cost generics. She also said it appears to be a response to calls, including from the administration, to move toward generics and biosimilars as one way to tackle rising costs.
"It will remain to be seen if this would actually cause a pharmaceutical company to lower their prices," Morgan said.
Harvard professor Frank said it’s a "worthwhile step" from a top PBM while tensions are running high on drug prices.
“I’ll put my optimistic hat on for a second and say hopefully it can be both; it can take the heat off of them because they’re giving consumers a better deal," he said. “Hopefully we’ll get deep enough into it so we’ll know whether in fact it’s socially beneficial in addition to being privately beneficial.”
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AHH: Drug manufacturing giant Pfizer announced Friday it plans to increase the list price of 41 drugs in January, despite pressure from the Trump administration and after initially announcing it would delay its price hikes.
The company will increase prices on about 10 percent of its drugs starting on Jan. 15, it announced on Friday. Some of the drugs will see 5 percent increases, while three others will increase 3 percent and one product 9 percent.
After Trump criticized Pfizer for “taking advantage of the poor & others unable to defend themselves," the drugmaker announced it would halt its price increases. “Pfizer at the time said the rollback would give Trump an opportunity to work on his administration's drug price plan,” Politico’s Sarah Karlin-Smith reports. “The company said it would reinstate price increases at the end of the year if the administration's drug pricing plan didn't take effect.”
Karlin-Smith reports that a spokesperson for Azar criticized the move, saying the increases “further illustrate the perverse incentives of America’s drug pricing system.”
OOF: There are just days left until Thanksgiving and federal health officials are still looking to identify the source of a widespread year-old salmonella contamination in turkey.
The outbreak is linked to raw turkey products that has spread to at least 35 states, my Post colleague Lena H. Sun reports.
“Health officials say the investigation has been complex because the strain has been identified in a wide range of products, and investigators have been interviewing sick people to trace it back to a single source,” Sun reports. “Without a source or supplier of the product or products that are making people sick, officials say the best advice for consumers is to handle raw turkey carefully — including washing their hands, cutting boards and other utensils after touching raw turkey — and to cook it thoroughly to prevent illness.
“There have already been two recalls of turkey products,” she continues. “One in February involved raw ground turkey pet food. On Thursday, FSIS announced that Jennie-O Turkey Store Sales in Wisconsin is recalling 91,388 pounds of raw ground turkey products that may be associated with the outbreak."
The Associated Press's Candice Choi writes that health officials who have been monitoring the outbreak say "there’s no reason to skip Thanksgiving dinner because of a salmonella outbreak linked to raw turkey... But they say it’s a reminder to properly prepare your holiday bird. Cooking kills salmonella."
OUCH: The World Health Organization’s response to the Ebola outbreak in the Democratic Republic of Congo is facing yet another hurdle as 16 people needed to be evacuated because of rebel violence in the region near where they were staying, Stat’s Helen Branswell reports.
The response team in the area is made up of more than 200 health workers. As of Sunday, Branswell reports there are 366 confirmed and probable cases of Ebola infections in the outbreak, and 214 deaths.
“After Friday night’s violence subsided, several members of the Ebola response team ‘were exhibiting some distress,’ [WHO Director General Tedros Adhanom] said, and a decision was made to pull them back to Goma, a city south of Beni, so that they could get a few days of rest and counseling,” Branswell writes. “Others insisted on staying in Beni, he said, calling them ‘very courageous people.’ "
“Friday’s violence was the latest in a string of attacks in the region,” she adds. It adds to the series of setbacks officials have faced in trying to contain the outbreak. The head of WHO’s emergency response program has said it will take at least another six months to do so.
— The Ohio House of Representatives passed a bill that bans abortions after a fetal heartbeat is detected, or at about six weeks. It's one of the most restrictive abortion bills in the country.
"A fetal heartbeat can be detected by an ultrasound as early as six weeks into a pregnancy, a time during which most women are unaware they are pregnant," the New York Times's Christina Caron writes. Ohio Gov. John Kasich vetoed a similar bill in 2016.
“Under the bill, approved Thursday by a vote of 60 to 35, performing an abortion on a fetus with a heartbeat would result in a fifth-degree felony, which is punishable in Ohio by up to one year in prison and a $2,500 fine,” Caron writes. “ The bill now heads to the Ohio Senate.”
“The measure includes no exceptions for rape or incest. Doctors may, however, make an exception during a medical emergency or if an abortion would save a woman’s life.”
The bill’s sponsor told the Times this piece of legislation is specifically meant to challenge Roe v. Wade, the landmark abortion rights Supreme Court ruling.
“We believe Ohio is best positioned to send this through the Circuit Courts and to the federal Supreme Court,” state Rep. Christina Hagan (R) said.
— Kansas’s Gov.-elect Laura Kelly (D), who campaigned on wanting to expand Medicaid in the state, said she’s confident the program can expand in 2019, the Wichita Eagle’s Jonathan Shorman reports.
“It’s not up to me to pass Medicaid expansion, it’s up to the Legislature to do that and I fully expect that they will address that issue this (next) year and if they put a bill on my desk and it does what it needs to do, I will sign it,” Kelly said in an interview last week.
She said she plans to put together “a Medicaid work group and we will look at what other states have done with expansion and how they’ve approached that and what the fiscal impacts have been and we will propose something we can do within our budget.”
“Supporters are encouraged by Kelly’s election. Expansion legislation will now need only a simple majority to pass because Kelly would almost certainly sign the bill into law,” Shorman reports. “Previously, lawmakers would have needed a supermajority in both the House and Senate because they would need to override the governor’s veto.”
— And here are a few more good reads from The Post and beyond:
- The American Enterprise Institute holds an event with CMS Administrator Seema Verma on "The new Medicare physician payment regulation" on Nov. 27.
- The Heritage Foundation holds a discussion about fetal tissue research on Nov. 27.
- The Senate Health, Education, Labor and Pensions Committee holds a hearing on reducing health care costs on Nov. 28.
President Trump suggested raking leaves to prevent wildfires in the future:
Cindy McCain said her late husband, Sen. John McCain, would be 'terribly frustrated' by the current political discourse: