qotd: Pharmacy benefit managers and drug firms battle; patients suffer

NPR
January 26, 2016
Fight To Lower Drug Prices Forces Some To Switch Medication
By Alison Kodjak

Steve Miller… The chief medical officer at Express Scripts, the largest
pharmacy benefit manager in the U.S., has been essentially auctioning
off his 80 million customers to the drug companies that will give him
the best deal.

Express Scripts and its rivals including CVS/Caremark and OptumRX manage
prescription drug coverage for insurers and employers. They're trying to
spark price wars among drugmakers by refusing to pay for some brand-name
medications unless they get a big discount.

The result is that average costs for many drugs are falling. At the same
time, consumers are being forced to change medications, sometimes to
brands that don't work as well for them.

This year, more than half of all people with insurance will have some
medications excluded from coverage, says Ronny Gal, a drug industry
analyst at investment firm Alliance Bernstein in New York.

"Drug companies have been pricing their drugs largely along the lines
of, you know, whatever you can get away with and still have the patient
get the drug," he says. "This year exclusion will become a standard
feature of the industry, which is actually quite a shocker for a lot of
patients."

Express Scripts pioneered the strategy two years ago, when it announced
it would no longer pay for 48 brand-name drugs.

Express Scripts isn't alone. Caremark, Optum and Prime Therapeutics also
refuse to pay for some name-brand medications. Dr. David Lassen, the
chief medical officer at Prime, which is the pharmacy benefit manager
for several Blue Cross and Blue Shield plans, says the company offers an
exclusion option to its health plan customers.

http://www.npr.org/sections/health-shots/2016/01/25/463809474/fight-to-lower-drug-prices-forces-some-to-switch-medication

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Comment by Don McCanne

Drug prices are a problem, so much so that many people will not fill
their prescriptions unless they have a drug plan that will cover most of
the costs. The United States relies largely on market solutions through
pharmacy benefit managers (PBMs), rather than through government
administered pricing. Markets and the government function quite differently.

Drug companies have been pricing their products at the maximum that the
market will bear, which results frequently in truly unreasonable prices.
As the market intermediaries, PBMs are now boycotting products that they
believe are overpriced. The obvious problem is that patients are then
denied coverage for some medications that may be much more preferable
than other options, including doing without.

In contrast, government programs such as Medicaid and the VA have been
able to negotiate even better prices while making the drugs more
accessible to patients on those programs.

It is time for us to quit pretending that there is some magic in the
market when it is our public programs that function far better. If we
had a national single payer program that included a drug benefit, the
intrusive obstruction of the pharmacy benefit managers would go away.