It wasn’t that long ago that the buzz in health care circles was about Express Scripts flexing its muscle to negotiate deep discounts for the new hepatitis C drugs. CVS Caremark and UnitedHealthcare’s OptumRx followed suit. Unfamiliar to the public, PBMs seemed to be emerging as the new heavy hitters of American health care, doing the good work of knocking down drug prices.
That may still be. But with the higher profile has come the slings and arrows of controversy and being investigated.
In the past year, Express Scripts and other PBMs have faced serious pushback from clients, the pharmaceutical industry, and the federal government. Express Scripts, the largest PBM with 85 million members and annual revenue of about $100 billion, is being sued by Anthem, one of its largest clients, for unfair dealing in their contract.
Perhaps even more worrisome for PBMs is that the Department of Justice and U.S. attorneys for the Southern District of New York and Massachusetts are beginning to investigate the industry’s pricing structures, client payment plans, and patient assistance programs.
Drug companies spent $7 billion last year on patient assistance programs. The bulk of the spending was for coupons. (Modern Healthcare)
Pharmaceutical companies, perhaps relieved that they aren’t the only ones taking flak for sky-high drug prices, are also pushing back. With the cost of new specialty drugs expected to match the amount spent on all other prescription drugs combined by 2018, pharmaceutical companies are getting more aggressive with direct-to-consumer coupons.
“I see the coupons as being disruptive and I think they are going to continue to be disruptive as more and more high price drugs come onto the market,” says Wayne Dix, vice president of Healthcare for SSA & Co., a New York management and consulting firm. Historically, Dix says, PBMs have structured their business model by controlling formularies. Offering coupons disrupts that model.
“So 2017 might be an interesting year and maybe a point of inflection for the PBM industry,” Dix says. “I think there are some pressures right now that are suggesting there is some rethinking that has to be done in terms of operational economics of how PBMs function.”
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