A recent article in The New York Times summarizes the actions of twenty-four states across the country to rein in out-of-control prescription drug costs. Despite promising initiatives from Washington, states are forging ahead to force pharmaceutical companies to disclose and justify their pricing methodology. States are also trying to regulate the middlemen who distribute prescription drugs and manage drug benefits for health plans, which have been described by some experts as the most corrupt industry in the U.S.
The fact is that there is little the states can do to actually control drug costs – instead, a common goal is requiring drug companies to report their production, marketing costs, and profits earned on their sales, as well as the fees and rebates paid to pharmacy benefit managers (PBMs). The hope is that any transparency gained from shining light on these figures will lead to lowered costs.
The pharmaceutical industry is fighting back. Drug companies are reaching into their very deep pockets to squash these attempts to regulate this part of their business. Sadly, for consumers and health plans, there is little protection against drug companies and distributors who are charging wildly inflated costs for their products and services. In a dissent regarding a Maryland law that was struck down after a drug industry association filed suit, Judge James A. Wynn, Jr. said that the court accepted the drug companies’ stance that they are “constitutionally entitled to impose conscience-shocking price increases” on consumers. There you have it…
Where does this leave struggling employers? Some have found the handful of PBMs who are willing to take on the role of fiduciary to act in the best interest of the health plan. These PBMs assert they do not engage in the common practice of promoting more expensive drugs in order to generate fees and rebates. Some employers are engaging companies to import specialty drugs from abroad where pricing is significantly lower. Still others are actively managing the site of care for drugs – especially those delivered by infusion – which can generate savings in the tens of thousands of dollars per patient per year. Pharmacy tourism is a new wrinkle gaining traction.
Employers that don’t have the patience to wait for federal and state government actions to produce results do have options.