Pharmacy benefit managers, including CVS Health Corp. and Express Scripts Holding Co., are pushing back against claims by U.S. Department of Health and Human Services Secretary Alex Azar that their industry has sought to block drugmakers from lowering their prices.
"We have not as part of the current dialogue or in any other circumstance instructed manufacturers not to lower list prices," CVS Health CEO Larry Merlo said in a June 29 letter to Azar, which was obtained by S&P Global Market Intelligence.
The CVS chief said he was "surprised" to hear Azar say drug companies would like to lower prices but pharmacy benefit managers, or PBMs, have not been cooperating.
"I want to assure you that this is not the case for CVS Health," Merlo said.
Jennifer Luddy, a spokeswoman for Express Scripts, said the PBM, which is being acquired by Cigna Corp., also was "not standing in the way of any drug company lowering its prices."
At June 12 and June 26 hearings convened by the Senate Health, Education, Labor and Pensions Committee and the Senate Finance panel, respectively, Azar testified that biopharmaceutical companies have wanted to make "substantial and material" price reductions but were being thwarted by middlemen, such as PBMs and wholesale distributors, who were seeking higher rebates.
The secretary made a similar claim during a June 20 forum hosted by The Washington Post.
If Azar's allegations are true that PBMs and distributors have been blocking biopharmaceutical companies from voluntarily lowering their prices, those accusations raise antitrust concerns, Democratic Sens. Elizabeth Warren of Massachusetts and Tina Smith of Minnesota said in June 29 letters to CVS and eight other companies.
Warren and Smith called on the companies to respond by July 13.
While Express Scripts' Luddy told S&P Global Market Intelligence that she was unable to share a draft response to the senators from the company, she reiterated "what we have said before on this issue, which is that drugmakers set prices and they can lower them at any time."
"We've always been in favor of voluntary price decreases that would make medications more affordable for our plans and their members," Luddy said in an emailed response to questions.
Warren and Smith already have heard from 10 drugmakers, which said they had no plans to lower their prices this year. In fact, many already have initiated price increases despite a May 30 pledge from President Donald Trump that there would be "voluntary massive drops in prices" from big drug companies by mid-June as a result of his May 11 strategic plan — which took particular aim at PBMs — to lower the costs of medicines in the U.S.
Neither Trump nor Azar have identified the companies they said were willing to lower their prices.
News of the recent price increases by drugmakers "further confirms that the easiest way to lower costs would be for drug companies to lower their prices," Mark Merritt, the outgoing president and CEO of the Pharmaceutical Care Management Association, which lobbies on behalf of PBMs, said in a July 5 statement.
He said a report issued last month by the Health and Human Services Office of Inspector General "debunked the myth that drugmakers have somehow been compelled to raise prices because of the discounts and rebates health plans and PBMs demand to reduce overall costs."
CVS chief urges government actions
In his letter to Azar, Merlo said CVS has kept drug price growth at 0.2% — the lowest in five years — for its PBM clients, including employers, unions, health plans and government programs, "despite manufacturer brand list prices increases on drugs near 10%."
Over 30% of CVS clients spent less in 2017 than they did in 2016 on prescription drug costs, Merlo said.
He acknowledged rising out-of-pocket costs for Americans at the pharmacy counter was a "very real issue," especially for the millions of Americans now covered in high-deductible health plans, which is about 45% of the those in the U.S. with prescription drug coverage.
Merlo called on the administration to take immediate actions to help reduce Americans' out-of-pocket drug costs, such as expanding the types of products allowed under Internal Revenue Service guidance to be covered by high-deductible health plans before the minimum deductible is satisfied, including medicines to manage chronic conditions.
"This option would help these plans provide more first dollar coverage at the pharmacy counter, improve medication adherence and health outcomes, and reduce sticker shock when consumers are filling their prescriptions," Merlo said.
That change could be accomplished immediately through the regulatory or guidance process, he added.
Merlo noted that CVS permits its PBM customers to apply rebates provided by biopharmaceutical manufacturers to the patient's cost-sharing at the pharmacy counter, which he said has reduced those American's point-of-sale costs by up to 30% for many branded drugs.
Such a reduction in price, which Merlo said could be encouraged through regulatory changes, may help increase medication adherence and ultimately beneficiary health.
Along with CVS' negotiation tools, he said the company was using other innovations to help consumers deal with the high cost of prescription drugs, such as providing real-time member-specific costs for a selected drug based on their coverage and up to five appropriate therapeutic alternatives that cost less.
"Early results show that prescribers accessing the real-time benefits changed their order for a patient's drug from a non-covered drug to a drug on formulary 85% of the time," Merlo said. "If the initial medication was covered but non-preferred and there is a lower-cost alternative available, prescribers are changing the member's medication up to 40% of the time, resulting in a difference in out-of-pocket costs to the patient of approximately $75-$100 per prescription."
He urged Azar to use "every regulatory tool at your disposal to encourage adoption of the use of point-of-prescribing real-time benefit information."
Merlo said he wanted to sit down with Azar to discuss the matter further.