Insurers and drug middlemen squared off with the pharmaceutical industry this week in a pitched battle over blame for high drug prices as the Trump administration crafts a plan to tackle the issue.
The pharmaceutical lobby released new ads Monday that blame practices by insurers and drug middlemen for high drug costs. That was met with a response that Big Pharma is just trying to distract the public and lawmakers from the real reason for high drug prices, which is the list price set by drug companies.
The ads from the Pharmaceutical Research and Manufacturers of America are part of their nearly year-long “Let’s Talk About Cost” campaign. The campaign, which started in July, targets insurers and pharmacy benefit managers, which oversee drug plans for employer or union-sponsored plans, for high drug costs.
The latest attack ads focus on “co-pay accumulator” programs that insurers and PBMs use to block coupons offered by drug companies for some medicines that can be applied to deductibles and out-of-pocket limits.
PBMs and insurers said the latest attack is a desperate attempt from the drug industry to change the narrative surrounding high drug prices.
“We’ve been through this before,” tweeted insurance lobby America’s Health Insurance Plans. “The original list price of a drug drives the entire pricing process, and that price is determined and controlled 100% by Big Pharma.”
AHIP added in a blog post that insurers and pharmacy benefit managers help to drive down costs across the supply chain.
“If pharmaceutical companies were left unchecked without health insurance providers or PBMs to intervene, does anyone truly believe that drug prices today would be lower?” AHIP asked.
The Pharmaceutical Care Management Association, which represents PBMs, also said that PhRMA is getting desperate to change people’s minds.
“They are lashing out, but I don’t think they are fooling any people,” said Mark Merritt, CEO of the association. “They are in trouble and on defense and this is part of their strategy.”
Merritt pointed to PCMA’s own campaign, called DrugBenefitSolutions, aimed at informing the public how PBMs work.
The latest battle comes amid uncertainty for all three sides.
The pharmaceutical lobby was wounded by an unsuccessful bid to lower the payments drug makers have to make under Medicare Part D in the omnibus spending bill that Congress passed last week
A short-term budget deal in February increased the amount that drug companies have to pay for seniors’ drug costs. Under the deal, drug companies had to cover 70 percent of the drug costs in Medicare’s “donut hole,” instead of 50 percent.
The donut hole refers to a gap in coverage in Medicare Part D, the entitlement program’s prescription drug plan. Once a senior’s drug costs reach a certain amount, Medicare no longer covers them and the senior winds up in the “donut hole.”
The short-term deal passed in February aimed to close the donut hole in 2019 instead of 2020. It also blindsided the pharmaceutical lobby by increasing their coverage of the drug costs from 50 percent in 2019 to 70 percent.
The drug lobby wanted lawmakers to scale back the contribution to 50 percent in the omnibus.
Now the pharmaceutical lobby is under scrutiny after the failure.
“Because pharma didn’t get the Part D piece done they are under a lot of pressure over there,” a Republican healthcare consultant told the Washington Examiner.
PhRMA did not return a request for comment.
PBMs and insurers also have faced criticism from Trump administration officials in recent weeks. Health and Human Services Secretary Alex Azar said during a speech this month that insurers and PBMs engage in a “crooked” scheme to not share the full benefits of rebates negotiated with drug makers with patients.
Food and Drug Administration Commissioner Scott Gottlieb said insurers and PBMs were “in cahoots” with brand name drug companies to stifle generic competition.
The PCMA responded this week that it supports legislation to combat the practice in which brand name drug companies use FDA safety rules to deny generic companies’ access to samples needed to develop a competitor.
Meanwhile, Congress is considering legislation that affects all sides of the debate.
A bipartisan group of House and Senate lawmakers is pushing the CREATES Act, which seeks to prevent brand name companies from using FDA safety rules to stifle generic competition.
Lawmakers are also seeking bills to curb what they describe as “gag clauses” installed by PBMs and insurers. The gag clause prevents a pharmacist from informing a patient that it would be cheaper to buy a drug with cash instead of using their insurance.
It is not clear what the drug policy plan that the Department of Health and Human Services is working on will include, but a report in Bloomberg quoted Azar as saying it will seek discounts from PBMs.
