Express Scripts has in recent years been a vocal critic of high drug prices, which the company has used to promote its services to potential customers as it competes against CVS Health Corp. and others to administer drug benefits for health insurers and large employers. Pharmacy-benefit managers also sometimes keep a portion of the rebates and discounts they negotiate from pharmaceutical companies.
Their solution involves incentive pay
Express Scripts this month told clients it is seeking deals with drug makers for differentiated pricing for certain cancer drugs based on how well they work against different types of tumors, Express Scripts Chief Medical Officer Steve Miller said in an interview. Currently, Express Scripts and most insurers pay the same per-unit rate for a cancer drug regardless of the type of cancer it is being used to treat.
The biggest benefit of this kind of reimbursement are the incentives it creates for future drug development.
Express Scripts may be vocal when criticizing high drug prices, but let’s look at the sheer volume of business when it comes to pharmaceuticals. In fact, zacks.com, a company that reports on earnings of organizations states that “Express Scripts Holding Company posted fourth quarter earnings per share of 1.39…revenues were up 2.1% year over year in the reported quarter to $26.3 BILLION, while profit was up 5.1% to $2.3 BILLION. Earnings per share are expected to continue to rise” (zacks.com, 2015).
ReplyDeleteDrugwatch.com discusses the fact that Big Pharma paid $3.5 BILLION to doctors and hospitals in 2013. “When you look at why drug companies and device companies make gifts and offer consulting payments to physicians, the main goal is to influence prescribing practices…to improve their financial bottom line…not represent the best interest of patients” (Llamas, 2014).
PBMs “keep a portion of rebates and discounts they negotiate from pharmaceutical companies”. So, is the PBM actually negotiating the lower prices for themselves, or for consumers? I feel that the bottom line is, there is a big economic value in pharmaceuticals, and by default, PBMs. Not only do they keep the economy running (people need medication, therefore it is relatively inelastic), but people feel dependent on them. And, when it comes to medication that is thought to either save or prolong one’s life, the pharmaceutical company holds the upper hand.
Zacks.com. (2015). Express Scripts Beats on Q4 Earnings & Revenues. Retrieved from http://www.zacks.com/stock/news/165483/express-scripts-esrx-beats-on-q4-earnings-amp-revenues
Llamas, Michelle. (2014). Big Pharma Paid $3.5 Billion to Doctors, Hospitals in 2013. DrugWatch. Retrieved http://www.drugwatch.com/2014/10/02/big-pharma-pay-doctors-hospitals-billions/