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Gilead exec points to benefit managers’ hidden role in drug price hikes

March 7, 2017

Gilead Sciences, which took heat from pharmacy benefit manager (PBM) Express Scripts over the prices of its hep C cures Sovaldi and Harvoni when they were introduced, has joined a chorus of drugmakers now trying to turn the tables on PBMs.

An exec for Gilead, which initially set prices for its hepatitis C cures Solvadi and Harvoni at about $1,000 a pill, told Bloomberg PBMs wouldn’t accept a price cut on the drugs at this point because they have fees for themselves built into the contracts.

“I have never met, in this entire experience, a PBM or a payer outside of the Medicaid segment that preferred a price of $50,000 over $75,000 and a rebate back to them,” Jim Meyers, executive VP of worldwide commercial operations for Gilead told the news service. “We have a system that’s incentivized upon rebate revenue.”

It is a refrain that has grown since Mylan CEO Heather Bresch first placed some blame on “middlemen,” for the increasing price of the company’s EpiPen allergic reaction treatment during her public thrashing in front of members of Congress last fall. She said middlemen like wholesalers and PBMs accounted for more than half of the epinephrine injector’s total cost.

Pharmacy-benefit managers help handle the drug benefit plans of insurers and employers, negotiating discounts for them from drugmakers in an effort to minimize rising drug costs. The largest, Express Scripts, got a lot of attention by cutting an exclusive deal for AbbVie’s Viekira Pak and dissing Gilead drugs, to extract big discounts on hep C meds in 2014. It has taken credit for saving consumers big bucks by instigating the pricing battle that ensued, which has taken a significant toll on Gilead’s revenues in recent quarters.

But drugmakers pay PBM’s rebates to get on the PBM’s drug formularies, often about 10%, which drugmakers are now saying is a significant factor in rising drug costs. Drugmakers have made the argument that the rebates force them to take higher price hikes than they need to compensate for the payments to the PBMs.

The finger pointing comes even as drug prices again take the spotlight in Congress. Eight senators are publicly asking Marathon Pharma to explain how it arrived at an $89,000 price tag on a decades-old drug recently approved for Duchenne muscular dystrophy (DMD). The company immediately halted the roll-out of the drug last month to explain its pricing to patient groups that were critical of the price. The decision also came the same day congressional pharma watchdogs Sen. Bernie Sanders and Rep. Elijah Cummings lambasted the company for pricing the drug so high since a generic is available from other countries for about $1,000 a year.

The senators are asking Marathon to explain its pricing strategy for the orphan-designated drug saying, they are “concerned that Marathon’s pricing unfairly exploits the DMD patient population and the FDA’s orphan drug incentives.”

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