Rising Drug Prices Are Caused by PBMs, Senators Claim

PBMs, Democrats against rising drug prices

This post was last updated on April 16th, 2019 at 08:41 am

The Senators in a hearing on Tuesday criticized the Pharmacy Benefit Managers (PBMs) and raised questions on their role in the rising drug prices.

The drug makers have always portrayed the PBMs and the insurers as villains in the discussions regarding medicine prices. Meanwhile, the latter widely denied the allegations and held the pharmaceutical companies responsible for rise in prices.

John Prince, CEO of OptumRx, argued, “Manufacturers continue to increase their list and net prices at unsustainable rates because the lack of competition allows them to.” He indicated that his PBM offers about 98 percent of the negotiated discounts directly to the patients. Some committee Democrats also favored the executives in criticizing drug makers.

The rise in the drug prices has become an important issue for the upcoming 2020 presidential elections in the country. Both, the president and the leading Democratic candidates have been trying to appeal voters on its basis. They claimed that people were skipping doses in order to control their drug bills.

Senator Ron Wyden, the committee’s top-ranking Democrat, who has been a critic of PBM for a long time, accused PBMs of being secretive about the pricing.

Wyden, who was against the spread pricing, said that the PBMs charge Medicare and Medicaid plans a certain amount for a drug and later reimburse pharmacies at a usually lower rate for the same drug and keep the difference.

In Tuesday’s hearing, the PBMs denied all the allegations and claimed that the spread pricing helps to stabilize drug costs and their company adds value to the health care system and saves the patients’ money. They said that keeping the rebates secret, is important for negotiating with drug companies.

In order to end such discrepancies, the Trump administration has been taking steps to end the system of secretive rebates in Medicare. With this, the savings would directly go to the patients at the pharmacy counters. The PBMs were not satisfied with the proposal as they said that the pricing problem could not be solved with the proposed rule and warned the government that it would only end up making drugs more expensive.

The argument put forward by the PBMs failed to justify their stance in the situation. Therefore, putting them at the receiving end of criticism from both, the Republicans and Democrats for their lack of transparency, harming the rights of the citizens.

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