Pharma Manufacturers and PBMs at Odds Over High Drug Costs

Manufacturers say they are unable to lower the cost of some drugs due to pharmacy benefit manager involvement.

Pharmacy benefit managers (PBMs) negotiate drug costs, with the goal of saving patients’ money. However, PBMs are facing growing scrutiny for an alleged lack of transparency in failing to confirm claims, along with testimony from pharmacy partners who have experienced hardships from PBM practices.

Last week, Gilead Sciences told Bloomberg News that they are unable to lower prices for their hepatitis C virus (HCV) drugs due to PBM involvement. These drugs, such as Sovaldi (sofosbuvir), are notoriously expensive, and the pharmaceutical industry has been criticized over the high costs.

“If we just lowered the cost of Sovaldi from $85,000 to $50,000, every payer would rip up our contract,” said Jim Meyers, executive vice president of worldwide commercial operations, told Bloomberg.

With an increased focus on prescription drug prices by President Donald Trump, pharmaceutical companies have been targeted, but these companies are pointing to PBMs as the part of the supply chain that needs to be put under a microscope.

In a study conducted by Berkeley Research Group, the investigators found that pharmaceutical companies only realize 39% of initial gross drug expenditures, which means that the rest of drug spending is going elsewhere.

Gilead is now alleging that PBMs are barring pharmaceutical companies from lowering prices to ensure that their portion of profits remain high, according to the article.

“I have never met, in this entire experience, a PBM or a payer outside of the Medicaid segment that preferred a price of $50,000 over $75,000 and a rebate back to them,” Meyers said.

PBMs have said that they use their large market share to drive down costs and increase reimbursements for the industry, including patients. However, the cost of HCV and other specialty drugs has not declined significantly over the last few years, even with the emergence of generics and biosimilars.

In the interview, Meyers told Bloomberg that the lack of uptake of Zepatier (elbasvir and grazoprevier), a less-costly HCV drug manufactured by Merck, is evidence that the lower reimbursement was not satisfactory.

Express Scripts spokesperson Brian Henry told Bloomberg that HCV drug costs were reduced because of their efforts, including the use of formulary competition to increase rebates. He also said that the lack of popularity of Zepatier was likely due to its late entrance to the market, which could mean that patients were already cured or were not as likely to take a lesser-known drug.

According to the article, both Express Scripts and CVS said that pharmaceutical manufacturers, and not PBM involvement, are the cause of increased costs, while pharmaceutical manufacturers argue the opposite.

In a response to the article, Express Scripts told Gilead to lower their HCV drug costs if they would like to.

“If you’re saying that the drug really is worth about $50,000, then it’s only right to make sure payers are made whole for overpaying,” Everett Neville, Express Scripts senior vice president of supply chain and specialty, wrote in a letter obtained by Bloomberg.

Neville also wrote that Gilead lowering the price of Sovaldi would “repay” costs incurred by Express Scripts members and the government.

“Let me assure you, we welcome a lower price,” Neville wrote to the Gilead CEO. “Not only would we agree to a lower list price, we’re asking you to offer one. We won’t rip up our contract.”

Gilead has not released a response to the letter, according to Bloomberg.

Although lawmakers, advocacy groups, and supply chain members tend to point the finger to 1 player, the pharmaceutical supply chain is very complex, and drug costs will likely not be decreased by targeting a single group. Collaboration between all stakeholders is necessary to examine the intricate pharmaceutical industry to formulate how to drive down costs.