It’s a tough time to be a middleman in the U.S. pharmacy business.
Jeff Bezos is teaming up with two fellow billionaires in what could be a prelude to bigger plans to undercut the dominance of intermediaries in the country’s complex health care system. Pharma companies are trying to shift the blame onto them for soaring drug prices. And costly new medicines are getting approved at a record pace pace by regulators in Washington.
In response, the middlemen known as pharmacy-benefit managers, or PBMs, are getting more aggressive with the tactics they use to control costs. Express Scripts Holding Co., CVS Health Corp. and UnitedHealth Group Inc.’s OptumRx are increasingly denying coverage of some drugs, negotiating discounts on others or requiring high co-pays for expensive treatments.
“It’s becoming more common that we have to play the gatekeeper role,” said Steve Miller, chief medical officer of Express Scripts, which manages prescription-drug benefits for more than 100 million people. “It’s becoming increasingly challenging because we have record numbers of specialty drugs coming to the market.”
The strategy has had some success. Express Scripts said clients’ drug costs rose 1.5% last year, the slowest in more than two decades. For 2018, Express Scripts and CVS each refused to cover about 150 drugs — typically in cases where they negotiated a better deal for alternatives.
The tension between PBMs and drugmakers is likely to intensify for two sets of promising drugs coming soon: treatments that help prevent migraines, and drugs for a little-known but widespread liver disease called NASH. PBMs and health insurers are turning their might on those two diseases because they affect broad populations. Payers say they’ll use the competition to negotiate discounts — a replay of the tactics they used with a new generation of costly hepatitis C treatments starting in 2013.
That would pressure Intercept Pharmaceuticals Inc., Gilead Sciences Inc. and Allergan Plc, which all have NASH trials under way. About 3% to 12% of American adults are estimated to have NASH, a condition most commonly found in people who are overweight or have diabetes.
“The population with NASH is large, so any new therapy in that disease is a definite ‘watch out’ for us,” said Eric Estes, senior director of pharmacy services at insurer Independence Blue Cross.
In migraine prevention, Amgen Inc., Eli Lilly & Co., Alder Biopharmaceuticals Inc. and Teva Pharmaceutical Industries Ltd. are working on new therapies — with at least three expected to reach the market within a year.
(Photo: M. Spencer Green/AP)
“Having four of them will allow us to be able to pit them against each other more effectively,” said Miller. “Even if they’re not exactly the same, you can have more negotiations.”