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Over the past year there’s been movement to rein in the three big PBMs, which face little regulation though they help set drug prices and drug choices for 80 percent of Americans and their doctors.
The House voted Dec. 11, 320-71, for legislation that would require the PBMs to change some of the ways they do business. The big three — CVS Health, Express Scripts, and OptumRx — have all announced their own reform measures in recent months.
The bill looks unlikely to pass the Senate, though some of its provisions might eventually become law. Meanwhile, some of the most baffling contradictions of PBM drug pricing are coming to a head.
Take AbbVie’s Humira, the highest-earning drug ever. Eight biosimilars — what ordinary people would call generics — came onto the market this year, raising hopes of big savings for patients and insurers. Some cost as little as $995 a month, compared to Humira’s wholesale price of $6,992.
The Pharmaceutical Care Management Association, which represents the big PBMs, told KFF Health News in a statement that its members are pushing to use more of the biosimilars. Why then, asks Juliana Reed, CEO of the Biosimilars Forum trade group, did Humira account for 98.5 percent of all sales of the drug and its biosimilars as recently as November?
I’ve been told that AbbVie has threatened to withhold rebates it pays PBMs for some of its other medicines unless they give Humira good placement on formularies, the all-important lists of drugs available to their customers. The PBMs say their formularies provide the best deal for employers, but these are “assertions impossible to verify,” says James Gelfand, president and CEO of The ERISA Industry Committee, which represents large employers.
The PBMs’ strategy is purposefully obscure. Negotiations with drugmakers constitute their special sauce and they aren’t sharing the ingredients. But given that it costs up to $300 million to develop a biosimilar, the Humira battle is key to the future of biosimilars in general, and to more competition to lower expensive drug prices.
“If you can’t break into anti-inflammatory drugs it will be hard to break into any model,” Gelfand said. “It’s the weather vane, the shape of things to come.”
There’s more weird stuff going on with biosimilars. To get Inflectra, its biosimilar to Johnson & Johnson’s blockbuster Remicade, onto formularies, Pfizer pays large rebates to insurers, I’ve been told.
That’s driven down average net prices for Inflectra as well as other versions of the drug.
Good, right? Not according to rheumatologists, the doctors who typically administer these complicated, infused drugs in their offices.
The doctors say they still have to pay much higher prices to obtain Inflectra from distributors. But their reimbursement from Medicare is reduced because of the rebates, they say. Several rheumatologists told me that the way the math works out — or rather, doesn’t — they could lose as much as $20,000 a year on each patient.
The choice is “lose money, or divert the patient to a hospital infusion center,” said Chris Phillips, a doctor in Paducah, Ky., who chairs the American College of Rheumatology’s insurance subcommittee. The latter is “more expensive and usually not as good an experience for the patient.”
Payment imbalances also have developed for Amgen’s Avsola, another Remicade biosimilar, and for biosimilar forms of Genentech’s Rituxan, a cancer drug also infused to treat autoimmune conditions, rheumatologists say.
“The whole point of biosimilars is to make these drugs more accessible, but they’re becoming unaffordable,” said Madelaine Feldman, immediate past president of the Coalition of State Rheumatology Organizations.
Spokespeople for Pfizer and for the Pharmaceutical Care Management Association acknowledged the rheumatologists’ dilemma. Each said it was up to the other to resolve the problem.
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