As recently reported in the Wall Street Journal ("Drugmakers Point Finger at Middlemen for Rising Drug Prices"), prescription drug manufacturers are increasingly laying the blame for skyrocketing pharmaceutical prices on the so-called "middlemen" in the drug distribution life-cycle. Pharmaceutical executives, from Mylan CEO Heather Bresch to Pfizer Chief Executive Ian Read, are pushing back firmly on accusations that the blame for the rising cost of drugs in the U.S. rests solely with the manufacturers. They are instead accusing Pharmacy Benefit Managers (PBMs) of acting as the primary drivers of price increases for drugs.
The CEOs cite companies like Express Scripts, Caremark, and OptumRx and their near stranglehold on drug formularies and the practice of wresting huge rebates from manufacturers as the true causes of higher drug costs. As noted in our prior client alert, "PBMs and Drug Pricing: Congress and Major U.S. Employers Start to Unravel the Hidden Pricing Mechanisms of PBMs," a number of entities—including Congress—are also taking note of the PBM business model and its deleterious effects on drug prices. PBMs control not only pharmaceutical company access to their customers via formularies, but often keep consumers, pharmacies, and drug manufacturers completely blind as to the actual costs of the drugs through their rebate programs. The entry of PBMs into the specialty pharmacy business (particularly in the realm of mail-order drugs) and the management of patient assistance programs are also serving to distort the market in ways that have only wound up damaging consumers.
While many independent pharmacies, patient-advocacy groups, and state and federal committees and task forces call for greater transparency in PBM pricing practices, actual solutions to the problem appear to be thin on the ground. As the issues wend their way through the courts and halls of government, the FisherBroyles Pharmacy Law team will continue to track issues of importance to pharmacies, including matters related to PBM investigations and litigation.