Caitlin Owens, Bob Herman March 15, 2019
Adapted from a Pew report;
Chart: Axios Visuals
As part of its plan to lower prescription drug prices, the Trump
administration wants to force a major change in the way industry middlemen make
their money. But that change is already happening naturally — and drug prices
aren't falling.
The big picture: Pharmaceutical
companies place the blame for high drug prices on pharmacy benefit managers and
their complex system of rebates. The Trump administration largely agrees with
that assessment, and has proposed a major overhaul that would make rebates a lot
less lucrative for PBMs.
Yes, but: Rebates are
already a shrinking part of PBMs' profits, and list prices of drugs aren't
coming down.
- PBMs
are keeping a smaller share of rebates and passing more along to their
clients.
- Instead,
PBMs are collecting more revenue through various fees — the same shift the
Trump administration envisions — and through a practice called "spread pricing," according to a Pew analysis.
- Express
Scripts, one of the largest PBMs, explicitly told investors last year it
would find "an alternate funding / pricing structure"
to offset lost rebate dollars.
The bottom line: "One
can call something a rebate, a flat fee or an elephant. It still represents a
lucrative flow of money, and the influence that goes along with it,” said Robin
Feldman, a UC Hastings law school professor who recently wrote a book exploring
these deals.
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