Trying to bring transparency and accountability to prescription drug prices to help lower costs for patients

by | Sep 20, 2018

Lowering the prices patients pay for prescription drugs is a hot topic on both sides of the political aisle, including for President Donald Trump.

“Americans deserve to know the lowest drug price at their pharmacy, but “gag clauses” prevent your pharmacist from telling you! I support legislation that will remove gag clauses and urge the Senate to act,” Trump tweeted Monday.

Later that day, the Senate passed the Patients Right to Know Drug Prices Act on a vote of 98-2. Among other things, it would prohibit the gag clauses that prevents pharmacists from telling patients that paying with cash may be less expensive than using their insurance benefits.

The proposal has the backing of the Pharmaceutical Care Management Association, the industry’s lobbying group.

“PCMA strongly supports (the) legislation that will ensure America’s patients always pay the lowest cost for their medications at the pharmacy counter, whether it’s the cash price or the copay,” PCMA President Mark Merritt said earlier this summer.

The proposal would block insurers or pharmacy benefit managers (PBMs) from requiring the gag clauses. Until now, PBM’s operated without much attention given to them.

A story published earlier this month by Bloomberg, illustrated the disparity in pricing as the result of the practices of the PBMs. The story tells of how a town pharmacist in Iowa, Mark Frahm, whose pharmacy had for years provided prescriptions to the local county jail and would be reimbursed for the drugs by CVS, saw a notice published in his local newspaper relating to prescription drug prices at the jail.

As he compared the newspaper notice with his own records, and then with the county’s, Frahm saw that for a bottle of generic antipsychotic pills, CVS had billed Wapello County $198.22. But South Side Drug was reimbursed just $5.73.


So why was CVS charging almost $200 for a bottle of pills that it told the pharmacy was worth less than $6? And what was the company doing with the other $192.49?

It’s a strategy known as “spread pricing,” a concept in which PBM’s, such as Express Scripts and CVS, can dramatically increase the difference between the amount they reimburse pharmacies for a drug and the amount they charge their clients.

In recent years, PBMs — which act as the middlemen between the patient and pharmacies — have become a cause for alarm for allegedly driving up drug prices and interfering  with patients’ access to medications.NnA new website is designed to further draw attention to the practice of marking up drug prices. A former pharmacy manager and a pharmacy lobbyist have teamed up to create a new firm called 46brooklyn Research. They provide a website that features a map to visualize the disparities that can exist in prescription drug pricing.

Now, a new website is intended to further draw attention to the practice of marking up drug prices. A former pharmacy manager and a pharmacy lobbyist have teamed up to create a new firm called 46brooklyn Research. They provide the website that features a map to visualize the disparities that exist in prescription drug pricing.

“It’s a massive problem, and it translates into billions of dollars in revenue for PBMs. $224 million in just one year for PBMs operating in just one space (Medicaid) in just on state (Ohio),” said Antonio Ciaccia, of 46brooklyn. “That’s insane, considering that PBMs have many other revenue streams, and offer a very minimal service for that money.”

The website includes disparities here in Florida in the price of medications provided by Medicaid.

For example, take a 40-milligram generic capsule of a drug to reduce stomach acid. It cost Florida’s Medicaid program $2.18. However,pharmacists paid just 49 cents for the pill in the first quarter of 2018. 46brooklyn says that means the PBM’s could be making $1.69 per pill. According to the firm, Florida’s Medicaid program paid a total $25,164 for 11,563 of the pills, while pharmacies paid just $5,682 for the same number of pills over the same period of time..

“Overall, it appears that Florida is paying a a little higher over’all rate ($/drug) than other states, but that the markups (pharmacy margin + PBM spread) is relatively low,” Ciaccia said. “Florida would need to do an audit like Ohio in order to see what they’re actually paying for. There are hundreds of millions of reasons that they should do that.”

“PBMs are only as bad as you allow them to be, and the same could be said for all members of the prescription drug supply chain. Transparency and accountability are necessary preconditions to rid the market of any bad actors,” Ciaccia added. “Drug costs keep going up and the big members of the supply chain keep making more money. If we want to get skyrocketing drug prices under control, we need to know what’s going on in the middle. Transparent marketplaces tend to be lean marketplaces. We need to know where the fat is if we’re ever going to cut it.”

46brooklyn is hoping that it’s new website will help bring transparency and accountability to the process of pricing prescription drugs.

Ciaccia says until something is done to find a resolution to the drug pricing problem, “Payers and providers are still incredibly vulnerable in the current landscape.”



%d bloggers like this: