There is currently a lack of transparency with pharmacy benefit managers around drug prices and where the rebates for drugs are going, but Congress is pushing for greater transparency that will benefit patients, said Ted Okon, executive director of the Community Oncology Alliance.
There is currently a lack of transparency with pharmacy benefit managers (PBMs) around drug prices and where the rebates for drugs are going, but Congress is pushing for greater a transparency that will benefit patients, said Ted Okon, executive director of the Community Oncology Alliance.
How can there be increased transparency around pharmacy benefit managers? What policy changes are needed?
I think that what we’re seeing in the PBM space is there’s a total black hole and lack of transparency. I think what has to happen—and there are several bills in Congress, and the administration is creating greater transparency. The problem now in the PBM space is if you look at this, you see the list price of the drug and the real net price of the drug diverging like never before. It’s like walking into a car dealership and seeing the sticker price on a car, and what you actually paid for it.
That shouldn’t be the case because the problem is with a higher sticker price or a list price, patients are going in and paying more—they’re paying their share off of that list price as well as the insurer. So, there’s this really murky world—and we use this idea on the word of murky, of not understanding—where these rebates are going except in the PBMs' pocket. So, I think what you’re going to see is a push, both from the congressional side as well as the administration, of greater transparency and finding out where are all these rebates actually going.
What is the result of increased transparency around PBMs? What is the benefit to patients and to providers?
The biggest problem that you have with a lack of transparency is that the list price of the drugs keep on increasing, even though the net prices in some cases are decreasing dramatically just on analysis of that, because there are now several pharmaceutical companies that are publishing on an annual basis their price increases and their difference between net to list prices.
So, I think that when you have greater transparency, number 1, we’ll find out where all these rebates are going, and we’ll see who’s really benefitting. I think right now it’s going into the pockets of the PBMs. You do have plan sponsors that are getting wise to this, insurers, and they’re asking for a cut of these rebates. But where’s the patient in this? Where are the providers?
So, what’s the net result of lack of transparency? Your patients paying higher costs, cost-sharing, whether it’s deductible whatever it may be, off of list prices. You then basically have the insurers, [and] the system paying more. But by having this divergence between the list price and the net price, you’re fueling drug prices. So, it’s kind of ironic that PBM—which set out to save the world and bring down drug prices, they’re fueling them.
And I don’t care what any PBM says, if you look at the last 5 to 7 years, what have you seen? You’ve seen consolidation in PBMs, you see the top 3 PBMs controlling about 80% of the prescription drug market, but drug prices are not going down, they’re going up. And why? Because manufacturers have to give—and I’m not just protecting manufacturers on this because they set the base price—but they basically have to account for all the discounts and the rebates they’re giving away in their prices.