The Supreme Court is hearing a case regarding the regulation of pharmacy benefit managers (PBMs), which BIO’s Chair Dr. Jeremy Levin says “drive up drug costs for patients through their complex system of kickbacks.” Here’s a look at the case and why it’s time to fix this system.
To start, what's a PBM? A third-party administrator of prescription drug benefits for a health plan, responsible for things like contracting with pharmacies, negotiating discounts and rebates with pharmaceutical companies, and processing and paying prescription claims.
On Tuesday, SCOTUS heard arguments in Rutledge v. Pharmaceutical Care Management Association, which examines an Arkansas law requiring PBMs “to reimburse pharmacies at or above their wholesale costs paid for generic drugs” and “prevents them from paying their own drug stores more than what is paid to other pharmacies,” says STAT News.
“The law was aimed at protecting independent pharmacies from abusive pricing practices” and patient access to prescription drugs, explains Roll Call.
The PBMs won the initial lawsuit and subsequent appeals—and the Supreme Court’s decision could impact 40 states that regulate PBMs, as well as patients.
Here’s why we need to fix the system: “[D]rug developers must offer rebates to secure a position on a PBM’s formulary, with the largest rebate winning preferred status,” explains Dr. Jeremy Levin, CEO of Ovid Therapeutics and Chair of BIO, in BioCentury. “To cover the rebates, drug developers increase the list prices of their drugs. Because patient copays are usually based on list prices, while the rebate sizes remain secret, this system of drug markups and rebates can add to out-of-pocket costs in meaningful ways—as much as 40% in many cases.”
Watch:
