Fifty Large Employers Form Pool To Negotiate Prescription Drug Prices
Fifty of the nation's largest employers have formed a pool to bypass pharmacy benefit managers and directly negotiate with pharmaceutical companies in an effort to reduce drug prices for their five million active and retired employees and dependents, the New York Times reports. The employers say that prescription drug prices continue to rise but that they typically have no way to determine the true costs of prescription drugs because prices are based largely on discounts on average wholesale prices "that are quoted by the industry but that no one actually pays," the Times reports. The employers say that even when PBMs negotiate better prices, overall costs keep rising because drug makers give PBMs rebates in exchange for encouraging increased use of multibillion-dollar products. As a result, the employers "suspect that they would be better off negotiating directly for the best prices for the drugs that best suit their employees' needs," according to the Times. The group plans to discuss pricing for the 50 drugs on which its members spend the most money, including cholesterol-lowering drugs Lipitor and Zocor; heartburn medications Prevacid and Nexium; painkillers Celebrex and Vioxx; antidepressants Zoloft, Paxil and Effexor; and allergy drug Allegra. However, the companies still would work with PBMs, which would continue to manage the employers' payments for generics and other less expensive drugs, set copayments, direct members with chronic health problems to mail-order pharmacies and manage other aspects of the companies' prescription drug plans. The group has begun discussions with drug makers and PBMs. They are working with the Human Resources Policy Association and benefits consulting firm Hewitt Associates.
Drug makers so far have "reacted positively" to the group's plan, according to Kenneth Sperling, a health care consultant at Hewitt. He added, "The pharma companies realize that the current rebate model has a limited future." However, David Snow, president and CEO of Medco Health Solutions, a PBM representing more than 60 million people, said, "It's worth trying, but I'm highly skeptical" that the employers can save money on the 50 drugs because drug makers only cut prices when deals create a larger market share for their products, which the employers are unlikely to achieve with their current purchasing power (Freudenheim, New York Times, 6/12).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.