There’s no better proof your recent video carries the drug lobby’s message than the PhRMA CEO’s two-word compliment — “Nailed It.”
The video (“Little Known Middlemen Who Save $$ On Medicines — But Maybe Not For You”) includes basic inaccuracies and confuses the roles of drug companies, wholesalers, drugstores, payors, and PBMs.
First, payors (employers, unions, government, health plans), not PBMs, decide what to do with the rebates PBMs negotiate on their behalf. While PBMs are typically directed to pass through 90% of rebates, an increasing number of payers choose to have all rebates passed through. This is a transparent negotiation between PBMs and their clients.
Likewise, it’s incorrect to say “consumers don’t see the savings” from rebates. Payors use rebates to reduce premiums, deductibles and co-pays for consumers.
Second, the video confuses the roles of PBMs, wholesalers and drugstores. Wholesalers and drugstores are the ones that buy and resell drugs. Whether those industries “pocket the difference” or include a “mark-up” is a question for them, not PBMs.
Third, the video confuses the role of drug companies (which set prices) and PBMs (which negotiate discounts off those prices). PBMs have no control over whether “prices for some drugs keep going up.”
It’s also a non-sequitur to say PBMs favor competing drugs with higher rebates and discounts “instead of the cheaper drug.” By definition, the drug with the lowest net cost is the cheaper drug. In any case, 90% of the claims PBMs administer are generics, which involve no rebates at all.
The real problem is that rising medical and prescription drug prices are making coverage harder to afford for payers and patients alike. Benefit design is not the cause but the effect. Payors try to cope by raising deductibles so they can continue offering coverage.
It’s no surprise the drug lobby is spending millions to divert attention from high prices and shift blame to PBMs and others working to make coverage more affordable. What’s surprising is that an established news organization would peddle such a misinformed video that so closely mirrors drugmaker talking points.