“DOSE OF REALITY” | Calling Big Pharma’s Bluff On PBMs: Part V

Apr 9, 2019

Big Pharma has tried to evade culpability for the crisis of rising prescription drug prices by pointing a finger at pharmacy benefit managers (PBMs).  As the U.S. Senate Committee on Finance prepares to hear from the executives of five PBMs on April 9, it’s time to debunk Big Pharma’s bluffs.  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.

Ahead of the hearing, we’re setting the record straight on the essential role PBMs play in negotiating savings for patients by calling out Big Pharma’s suspect claims and pushing back on the proposed Rebate Rule’s false promises.

Yesterday, we dismantled the argument that eliminating rebates would benefit Medicare seniors.

In our final installment, we beat back on the premise that banning rebates would be anything other than a win for Big Pharma.


Banning Rebates Wouldn’t Reward Big Pharma For Price Gouging.


By The Government’s Own Analysis, The Rebate Rule Would Line Big Pharma’s Pockets With A $137 Billion Giveaway And “The Pharmaceutical Manufacturers Would Benefit From The Proposed Rule Overall.” 

  • 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)

Actuarial Analysis Concludes “The Costs [Of The Rebate Rule] To The Federal Government Would More Than Offset … Savings.”  

  • 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)

Concerns Around The Rebate Rules’ Uncertainty And Its Potential To Put More Power In The Hands Of Big Pharma Are Shared By Health Care Experts, Industry Organizations And Journalists.  

  • American Enterprise Institute Scholars Joseph R. Antos & James C. Capretta: “Undercutting The Ability Of PBMs To Secure Rebates Would Shift Power And Leverage To Drug Manufacturers. It Is Hard To See How Taking That Step Would Lead To Lower Overall Costs For Consumers.” (Joseph R. Antos & James C. Capretta, “Assessing The Effects Of A Rebate Rollback On Drug Prices And Spending,” Health Affairs, 3/11/19)
  • America’s Health Insurance Plans (AHIP): “Nothing In The Rule Requires, Or Even Incentivizes, Big Pharma To Lower Their Drug Prices. The Result Will Be That Prices Will Continue To Go Up, And Savings That Should Go To Seniors And Taxpayers Will Instead Go Into The Pockets Of Big Pharma.” (Sarah Owermohle & Sarah Karlin-Smith, “Prescription Pulse: Will Dropping Rebates Raise Premiums? Azar Says, No,” POLITICO, 3/18/19)
  • New Hampshire Health Care Association President & CEO Brendan Williams: “The Real Point Of All Of This Appears To Be To Confer Further Riches Upon Drug Companies And Medicare Advantage Insurers, With Ending The Drug Rebates Adding Up To $196.1 Billion In Federal Spending By 2029, According To The Trump Administration’s Own Figures.” (Brendan Williams, “My Turn: Trump Administration Keeps Making Life Harder For Older Americans,” Concord Monitor, 3/19/19)
  • Axios: “One Thing That Is Pretty Certain: Pharma Wins. There’s No Mandate To Lower List Prices, And Drug Companies Would Get To See Competitors’ Rebates.” (Bob Herman, “Taking Stock Of Trump’s Drug Rebate Proposal,” Axios, 2/4/19)


Click through to catch up on Calling Big Pharma’s Bluff On PBMs: Part I HERE, Part II HERE, Part III HERE and Part IV HERE.