Drug middlemen say Pharma sets prices. Then why do middlemen have hundreds for the same drug?

Drug middlemen say Pharma sets prices. Then why do middlemen have hundreds for the same drug? BY: MARTY SCHLADEN - JULY 28, 2024 10:00 AM https://wisconsinexaminer.com/2024/07/28/drug-middlemen-say-pharma-sets-prices-then-why-do-middlemen-have-hundreds-for-the-same-drug/?emci=08e0913c-174d-ef11-86c3-6045bdd9e096&emdi=6bf11f65-a84d-ef11-86c3-6045bdd9e096&ceid=534498 Pharmacy middlemen known as pharmacy benefit managers deny claims that they’re responsible for the inflating cost of medicine. They say that big drugmakers are the sole culprits for the sticker shock you or whomever pays for your insurance experiences at the pharmacy counter. On the surface, it seems to make sense. If the pills are ridiculously expensive, the first suspects would be the companies that make them. But new evidence has emerged showing that things aren’t so straightforward. Drug transactions are controlled by middlemen who are owned by huge health conglomerates that also own big insurers. And a new report says that those companies often list hundreds of different prices for the same drug, some that are 51 times as much as others — or even more. Pharmacy benefit managers, or PBMs have been coming under fire for years. Community pharmacists accuse them of engaging in anticompetitive practices to the advantage of their own affiliated pharmacies while they drive competitors out of business. The result, some analysts have said, is decreasing competition and higher prices. The Federal Trade Commission earlier this month issued a scathing report saying it uncovered what appeared to be evidence of anticompetitive practices. It noted that each of the corporations that owns the three biggest PBMs is one of the 15 largest in the United States. Combined, they went from receiving 12% of all U.S. healthcare dollars in 2016 to 20% last year — a 67% increase in their share of a gargantuan healthcare market over eight years. In addition to being part of huge conglomerates, the big-three PBMs are huge players in their own right. Combined, they control about 80% of the insured drug transactions in the United States. They act on behalf of insurers, which are often part of the same company. And they decide how much to reimburse pharmacies with which they are often in direct competition because they own mail-order pharmacies and one, CVS, is the largest brick-and-mortar retailer. Since they decide which drugs are covered by insurance, they also have great leverage with the companies that make them. But as prices have shot up, PBMs have blamed drugmakers for the rise. “Big drug companies alone set and control drug prices and want to restrict pharmacy benefits to prevent pharmacy benefit companies from providing the only real check on their pricing power,” the Pharmaceutical Care Management Association, an industry group, says on its website. The statement might seem strange since the big PBMs claim they use their size to force drugmakers to lower prices. And Medicare data regarding generic drugs seems to show that PBMs have considerable agency in price-setting. An analysis showed that Part D plans owned by the same parent companies as the big PBMs reimbursed their affiliated middlemen for the same drugs at hundreds of often wildly different price points. The analysis, by 46 Brooklyn Research, looked at data for thousands of drugs covered by companies that act as insurers under Medicare Part D. They manage plans that are underwritten by taxpayers, while beneficiaries have to pay premiums and sometimes make copayments. For some drugs, the disparities between high and low prices aren’t very big. For others, they’re vast. Take the cancer drug imatinib, for example. Providers owned by CVS Health, then conglomerate that also owns the biggest PBM, reimbursed PBMs at 501 different rates ranging from $1,794 to $6,826 for a month’s supply. Plans affiliated with Cigna/Express Scripts, the owner of the second-biggest PBM, reimbursed at only 19 different rates ranging from $2,732 to $3,657. Meanwhile plans affiliated with UnitedHealth, owner of the third-biggest PBM, paid at fewer price points than CVS, 115, but they varied much more wildly — from $79 to $6,826 for a month’s supply. The data didn’t indicate which PBM handled transactions at the different prices or how much the pharmacies filling the scripts got paid. So the analysis couldn’t evaluate whether the conglomerates were using the variable pricing to the advantage of their affiliated companies. But if those variations make you suspect there’s an arbitrary element to the prices health conglomerates assign to drugs, you’re not alone. In its conclusion, the FTC report says they have an incentive to use that variability to their own advantage. “…these healthcare conglomerates operate some of the largest retail, mail order, and specialty pharmacies in the country, which compete with local independent pharmacies,” it says. “Given these relationships, PBMs and their affiliated entities may have the incentive and ability to engage in steering a growing share of prescription revenues to their own pharmacies through specialty drug classification, self-preferential pricing, and pharmacy contracting procedures to target and control the business operations of pharmacies.”