DOSE OF REALITY: DEBUNKING BIG PHARMA’S SUPPLY CHAIN BLAME GAME

Drug Companies Target PBMs and Rebates That Play a Critical Role in Lowering Drug Prices to Evade Responsibility and Boost Their Bottom Line

Big Pharma has long tried to evade culpability for the crisis of rising prescription drug prices by pointing a finger at others in the drug supply chain. Drug companies, in particular, have targeted pharmacy benefit managers (PBMs) and sought to cast them as unnecessary “middlemen,” in order to distract from Big Pharma’s egregious price-gouging behavior. And now the White House is using these same Big Pharma talking points to push a misguided proposal that would eliminate a key negotiating step that serves as the only real check on the pharmaceutical industry’s unilateral control over prices. The proposal, called the Rebate Rule, would also hand Big Pharma a more than $100 billion bailout, while increasing premiums on Medicare Part D beneficiaries and costing taxpayers billions.

The truth is, PBMs serve an essential role in the prescription drug distribution chain and work on behalf of payers and consumers to reduce prescription drug costs, increase convenience and improve safety. Today, we’re setting the record straight by debunking five other tired myths pushed by Big Pharma about PBMs and rebates.

MYTH #1: Price Savings Secured By PBMs Aren’t Passed On To Patients.
 
FACT: PBMs Pass The Vast Majority Of Rebates Onto Their Customers, Who Return Savings To Consumers And Patients By Way Of Lower Premiums And Reduced Cost Sharing.

• PBMs Pass Back 90 Percent Of Negotiated Rebates. (“The Facts About Pharmacy Benefit Managers And Rebates,” Express Scripts, Accessed 3/29/19)
• Experts At Both The Federal Trade Commission And The Department Of Justice Agree That The Rebates PBMs Negotiate In Confidence Produce More Competition And Lower Costs For Plan Sponsors And Patients. (“The Facts About Pharmacy Benefit Managers And Rebates,” Express Scripts, Accessed 3/29/19)
• In 2017, Medicare Part D Premiums Would Have Been 45 Percent Higher Without PBM-Negotiated Rebates. (Randall Fitzpatrick & Chris Carlson, “Premium Impact Of Removing Manufacturer Rebates From The Medicare Part D Program,” Oliver Wyman, 7/6/18)

• PBMs Save Customers And Patients Between 40 And 50 Percent On Their Annual Prescription Drug Costs. (“The Return On Investment [ROI] On PBM Services,” Visante, November 2016)
• PBMs Will Save American Patients $2 Trillion Over The Next Decade. (“The Facts About Pharmacy Benefit Managers And Rebates,” Express Scripts, Accessed 3/29/19)
• PBMs Are Projected To Save The Health Care System $654 Billion Over The Next Decade. (“Pharmacy Benefit Managers,” Express Scripts, Accessed 3/28/19)

• Most Drugs Do Not Receive Rebates, Including 89 Percent Of Medicare Part D Prescriptions. (Nicholas J. Johnson, Charles M. Mills & Matthew Kridgen, “Prescription Drug Rebates And Part D Drug Costs,” Milliman, 7/16/18)
• Of The 13 Percent Of Medicare Part D Prescriptions For Brand-Name Drugs Only 11 Percent Have Rebates. (Nicholas J. Johnson, Charles M. Mills & Matthew Kridgen, “Prescription Drug Rebates And Part D Drug Costs,” Milliman, 7/16/18) 
• Few Rebates Are Offered For New Drugs Which Can “Cost Hundreds Of Thousands Of Dollars A Year” Because They Lack Competition. (Katie Thomas, “Meet The Rebate, The New Villain Of High Drug Prices,” The New York Times, 7/27/18)

• Centers For Medicare And Medicaid Services Actuaries Predict That Under The Rebate Rule, Medicare Part D Premiums Will Increase By 19 Percent In 2020 Alone And 25 Percent Overall. (Center For Medicare & Medicaid Services Office Of The Actuary, Memo On Proposed Safe Harbor Regulation, 1/31/19)
• Under The Rebate Rule, “Premiums For Households Would Increase By $50 Billion – An Expense That Would Be Borne By Medicare Part D Enrollees.” (Center For Medicare & Medicaid Services Office Of The Actuary, Memo On Proposed Safe Harbor Regulation, 1/31/19)
• Oliver Wyman Analysts: “One Of The Major Contributors To Holding [Medicare Part D] Premiums Relatively Flat Over The Last Five Years Are Manufacturer Rebates.” (Randall Fitzpatrick & Chris Carlson, “Premium Impact Of Removing Manufacturer Rebates From The Medicare Part D Program,” Oliver Wyman, 7/6/18)

• On Average, PBMs’ Savings Per Person Per Year In Medicare Part D Are $2,341. (“The Return On Investment [ROI] On PBM Services,” Visante, November 2016)
• “Part D Plan-Negotiated Manufacturer Rebates Have Resulted In $34.9 Billion In Beneficiary Premium Savings For Enrollees From 2014 To 2018.” (Randall Fitzpatrick & Chris Carlson, “Premium Impact Of Removing Manufacturer Rebates From The Medicare Part D Program,” Oliver Wyman, 7/6/18)

• Government Actuaries Predict Drug Manufacturers Will Keep At Least 15 Percent Of What They Would Have Offered PBMs And Plans In Rebates, In Order To Offset Their Increased Share Of Covering The Medicare Part D “Donut Hole” As Outlined In The Bipartisan Budget Act Of 2018. (Center For Medicare & Medicaid Services Office Of The Actuary, Memo On Proposed Safe Harbor Regulation, 1/31/19)
• Centers For Medicare And Medicaid Services Actuaries Estimate That The Rebate Rule Will Give Big Pharma A $137 Billion Windfall In Overall Drug Spending. (Center For Medicare & Medicaid Services Office Of The Actuary, Memo On Proposed Safe Harbor Regulation, 1/31/19)

• Eliminating Rebates In Medicare And Medicaid Would Increase Federal Spending By $196 Billion Over Ten Years, While Providing No Guarantee Drug Makers Would Lower Prices Or Change How They Price Drugs. (Center For Medicare & Medicaid Services Office Of The Actuary, Memo On Proposed Safe Harbor Regulation, 1/31/19)

Learn more about the Big Pharma bailout, aka Rebate Rule HERE.