In all honesty, I haven’t kept up with the recent Pharmacy Benefit Manager furor, beyond assuming that they are totally corrupt as is anyone dealing with them. PBM’s like Express Scripts have earned notoriety by having preferred pharmaceutical makers sell them more expensive preferred drugs, which are then put on formularies. The drug makers then give a fat rebate to the PBM’s that pocket them and express sympathy for patients paying high drug costs. They also have fun “clawback” mechanisms where they overcharge the patient via co-pays, and then force the pharmacy to send back the difference as delicious profit (In fact the only time I previously paid attention to these thieves is when I profiled one of their scumbag doctors who, having lined his pockets as chief medical officer for Express Scripts, now spends his days advocating for a national health system and trying to shut down DPC).
Now Express Scripts (owned by Cigna) says Wednesday it will offer “employers, labor unions and other clients the option to cap at $25 a month the copayments and other out-of-pocket costs that diabetics must pay to fill their insulin prescriptions.
The cap, if picked up by employers, would save the average patient about $15 a month, or 40%, and even more for patients covered under a typical high-deductible health plan, according to Express Scripts. Patients could start benefiting from the lower out-of-pocket costs in the next few months, depending on when employers decide to opt-in.”
This same article states that insulin-maker Lily has seen reduced Humalog profits over the past five years, while list prices have increased 52%. Golly, that’s a lot of profit to go missing – I wonder who has it?
“The Health Care Cost Institute recently put out a report decrying the impact it alleges pharmacy benefit managers have had on the cost of insulin, with exhibit A being the fact that its price seems to have increased smartly over the past few years.
The report is based on private paid claims data from three large health insurers. It suggests that Type 1 diabetes costs rose from $12,467 in 2012 to $18,494 in 2016. The study found that insulin cost accounted for 31% of the increased cost per-person, as the average annual spending for insulin jumped from $2,864 to $5,705 between 2012 and 2016.”
But after teeing the argument up, this article reverses:
“However, the notion that our rebate system is to blame for high drug prices is a facile argument. The current arrangement between providers and drug manufacturers may not be ideal, but our entire convoluted health care system is far from ideal. PBMs developed because they presented a way for buyers to exert a modicum of pressure on the market to their advantage, which helps contain prices … Their insurance effectively insulates them from higher prices, which begets the need for something akin to a PBM.”
Where does that leave us? Humulin hit the shelves in 1983, and Humalog shortly after. Honestly I don’t understand why patents ever run out and why the makers shouldn’t be able to court astronomic profits (of course they do anyway). The recombinant aspect seems to have protected name-band status beyond simple molecular concoctions. But wait: “Amid the scrutiny, Lilly said last month it would introduce a generic version of Humalog, among the most widely used insulins, at half the list price of the brand-name product.” So now that the hand was seen in the sugar-free cookie jar, Express Scripts wants to be helpful, and so does Lily.
And will Lily suddenly go all transparent with their pricing and offered rebates, or will we see other creative ways to sell the name brand to other health plans?
What will the unforeseen effects be? Express Scripts offering a path to cap employer outlays/employee out-of-pocket costs either means they are taking a PR motivated decrease in profit, or…
…they plan to make it up somewhere else. I wouldn’t go dumping those Cigna stocks just yet.
“The Express Scripts program will be funded with a new pot of money that some drugmakers agreed to pay to the PBM to offset patient out-of-pocket costs,” said Dr. Glenn Stettin, ES chief innovation officer, “That money is separate from the rebates that insulin-makers already pay to PBMs.”
“We figured out a way to get additional money from the pharmaceutical manufacturers. They’re reinvesting money they could’ve spent elsewhere and helping us make the insulin more affordable to the patients that we serve.”
Which is damn nice of them.