Pharmacy benefit managers (PBMs) now implement prescription drug benefits for some 266 million Americans who have health insurance, and will save $654 billion over 10 years.
At $50,400, the net U.S. price per course of treatment for Harvoni was below the net price in France, Japan, Spain, Germany, and the U.K. in 2015.
A year ago, two new drugs that used a novel mechanism to drive down cholesterol levels came on the market, and were promptly crowned as blockbusters in-waiting. Analysts estimated sales at more than $3 billion a year.
As policymakers consider new ways to reduce prescription drug costs, they should start by rejecting schemes to undercut the cost-savings tools widely used by employers, unions, health plans, and popular, affordable programs like Medicare Part D. Specifically, lawmakers must protect the ability of the employers and unions that provide coverage – and the pharmacy benefits managers (PBMs) they hire – to negotiate aggressive discounts from competing drug companies.
The competition-based PBM approach has been highly successful, yielding broad access to prescription drugs and 90% consumer satisfaction rates. A recent study shows PBMs are on track to reduce prescription drug coverage costs by $654 billion over the next decade for government and commercial payers.
The reality is that the president cannot use government negotiations to lower drug prices. Despite the repeated assertions to the contrary, there are tons of negotiations in the Medicare drug program. They are private negotiations between and among prescription drug plans, pharmacy benefit managers, and drug manufacturers — and they produce substantial price reductions. The government doesn’t add anything to this mix because it doesn’t have a formulary that would allow it to favor one drug over another, and negotiate a discount in exchange. The reality is that the federal government has no such mechanism to discriminate, and thus no real ability to more effectively negotiate.