Fight To Lower Drug Prices Forces Some To Switch Medication

By Alison Kodjak
NPR, January 26, 2016

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.

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.