- Informing payers of looming drug price hikes hurts patients much more than it helps, industry trade group PhRMA argued in a blog post published last week.
- The post comes as a growing number of states are considering and passing legislation aimed at making drug pricing decisions more transparent. California's State Bill 17 is one example. Signed into law in October, it requires pharmaceutical manufacturers to give 60 days' notice before enacting price hikes for certain medicines, and is already shedding light on some aspects of the opaque pricing system.
- Yet PhRMA argues letting insurers, distributors and pharmacy benefit managers (PBMs) know when a drug's price is about to increase could encourage them to stockpile a drug while it's at a lower price, then sell it later for a larger profit. That process doesn't lower consumers' out-of-pocket costs, according to the trade group, and could spur supply shortages.
It's become routine at this point. Facing the ire of lawmakers, drug companies have blamed the high costs of many prescription medications on payers — and vice versa.
The back and forth generally concerns out-of-pocket costs, which is a chief issue fueling the push for greater pricing transparency. Manufacturers say such costs aren't really determined by a drug's list price, but rather how much of the savings from rebates and discounts payers pass on to patients. Payers, meanwhile, note that deductibles and coinsurance payments are often based on the list price, which is set solely by drugmakers.
"By negotiating price concessions from drug companies and recommending strategies that promote generics and more affordable pharmacies, PBMs have played a key role in [restraining] the rise of overall drug costs to low single-digit increases over the past few years," Mark Merritt, CEO of PBM trade group Pharmaceutical Care Management Association, said during a Senate hearing in October.
"Mandatory price reporting of a medicine's list price has little impact on what patients actually pay because it does not reflect the rebates or discounts their insurer or PBM receive for the medicine, which impacts the level of insurance coverage for that medicine and determines the patient's final take-home cost," Saumil Pandya and Emily Donaldson, both part of PhRMA's policy and research team, wrote in the March 29 post.
In addition to duking it out with payers, PhRMA has been an active challenger of pricing transparency legislation popping up in several states. Late last year, it filed a complaint against State Bill 17 claiming that, among other things, the law violates the Constitution. PhRMA and biotech trade group BIO also attempted to block a Nevada drug pricing bill aimed at diabetes medications.
And more battles are sure to come. The National Academy for State Health Policy identified 80 pieces of drug pricing legislation moving through state governments as of March 23.
Still, it's unclear how dramatically such laws will affect the ultimate costs of pharmaceuticals. In relation to California's bill, Politico obtained documents that found Valeant Pharmaceuticals International Inc. intends to enact a 63% increase on the wholesale acquisition cost of its glaucoma drug timolol maleate. Teva Pharmaceutical Industries Ltd. is also planning a 49% hike to the price tag of its asthma treatment cromolyn sodium, Politico reported.