Since 2000, many branded drugs in the US have experienced rapid annual price increases.
Take the diabetes drug Lantus. It’s seen 20% annual list price increases from 2001-14.
Insurers employ Pharmacy Benefit Managers (PBMs).
These are middlemen who use the combined volume of insurers as buying power to drive down drug prices, making drug makers pay a rebate on the list price. PBMs keep a big chunk of this rebate yet have been unable to prevent the consumer from paying rapidly increasing prices.
In 2014/15, some diabetes drugs such as Lantus started coming under pricing pressure.
PBMs played companies off against each other, threatened to exclude drugs from the all-important formulary, and for Lantus, used the threat of imminent biosimilar entry (generics for complex biologic drugs) to get further deductions.
And the pressure didn’t stop there.
The 2015 launch of Entresto, a drug that shows significant improvement in heart failure conditions, was suppressed by PBMs.
PBMs created barriers for patients: Prior Authorisations (a long form the doctor has to fill out to get the drug approved by the insurer) and step therapies (the patient has to fail other drugs first).
PBMs resorted to these tactics because drug expenditure is now so high that many can’t afford insurance, with the proportion of consumers taking cheaper high deductible insurance plans rising dramatically. Consequently, insurers want PBMs to cut costs.
So what are the possible long term solutions to get drug prices down?
Find out next #PharmaFriday.