Drug Companies and PBMs Are Attacking Each Other Over Drug Prices. There Is Plenty of Blame To Go Around.

May 31, 2017

 

Pharmacists, health insurance companies, pharmacy benefit managers (PBMs), and pharmaceutical companies are all pointing fingers at one another over drug prices. Each party says they are behaving ethically and that the other actors in the supply chain are the ones responsible for higher costs. Since Congress is considering a number of important bills to control prices, the stakes of this contest are incredibly high. It can be confusing to sort through the mass of accusations and reports, but there is plenty of blame to go around, and pharmaceutical companies and pharmacy benefit managers are most at fault.

 

To begin with, PBMs have stepped up their lobbying efforts. In the past we have laid out the problems with these organizations—how the PBM market has little competition and is dominated by three massive companies, how they fail to disclose data on their rebates, how the FTC does not adequately regulate the companies. In response, the Pharmaceutical Care Management Association (PCMA), their largest lobbying group, has launched a counteroffensive. In a memo PCMA spoke about how they were “building a political ‘firewall’ on Capitol Hill”, influencing the PBM regulatory environment at the state and federal level, and engaging Trump administration officials on how PBMs actually reduce drug costs. They also said they had partnered with conservative groups and created their own advertising campaign, Drug Benefit Solutions. When independent pharmacies visited Congress to advocate for stronger PBM regulation, Express Scripts paid for emails and messages questioning whether the pharmacies were really representing patients.

 

Drug companies haven’t been idle either. During the 2016 elections they contributed over $58 million to presidential and congressional candidates, and in 2017 they have already spent over $78 million on lobbying, substantially more than the previous year. Pharmaceutical Research and Manufacturers of America increased its annual dues by 50% and has been using the extra cash to run advertisements in many different places. Their ads have popped up on television, social media outlets, newspapers, and magazines. They have also run ads criticizing other groups, arguing that PBMs and health insurers are the real reasons for increased costs, and drug companies have less control over prices than one might think.

 

Both sides will need all the clever publicity they can get. The public has soured on them due to bad actors. These actors include Turing Pharmaceuticals, which bought the rights to an old medicine and then raised the price astronomically, and Express Scripts, which was recently dropped from its contract with Anthem after Anthem determined it was being overcharged and the PBM was failing to pass along discounts it negotiated on drugs. The various companies have hired PR firms and tried to distance themselves from egregious examples of price gouging.

 

But where there’s smoke, there’s fire. Drug companies and PBMs are mobilizing and frantically lobbying Congress because they are concerned that meaningful reform to combat price gouging will pass. Consumer advocates and reformers are making steady progress and they should take heart; the blame game shows that the companies acknowledge there is a problem. This is no time to turn back.

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