Major pharmacy benefit managers (PBMs) have increasingly been playing hardball with drugmakers as health insurers and policymakers express concern over the spiraling cost of prescription medicines, the Wall Street Journal reports.
CVS and Express Scripts, two of the leading PBMs, have taken to denying coverage for certain high-cost drugs if there are viable lower-cost alternatives. This bargaining strategy allows PBMs to "extract over-sized discounts from the pharma manufacturers," Express Scripts Chief Medical Officer Steve Miller told the publication.
Indeed, this tactic has resulted in "significant savings" for employers and other sponsors of benefit plans, a CVS spokeswoman said.
Most recently, CVS announced that it will no longer cover Viagra for its drug-benefit plan members. The spokeswoman declined to offer a specific reason for excluding that particular drug, and Pfizer, Viagra's manufacturer, also declined to comment other than to say that the drug remains available to millions of patients.
The practice of PBMs excluding drugs from coverage is relatively new, the WSJ notes, as CVS began doing so in 2012 and Express Scripts quickly started doing the same. Before that, PBMs were more likely to encourage patients to choose lower-cost drugs by requiring them to pay more out of pocket for pricier ones.
Drug exclusions now appear here to stay, as the number of drugs excluded by at least one of the two major PBMs could increase to 130 this year and to 165 in 2016, estimates Geoffrey Porges, an analyst for the investment research firm Sanford C. Bernstein.
CVS and Express Scripts aren't the only major players in the PBM market focused on cutting costs, however. UnitedHealth Group's acquisition of Catamaran, through which it plans to directly compete with the two largest PBMs, is driven primarily by its desire to combat high drug prices. And planned mergers between Aetna and Humana as well as Anthem and Cigna have the companies' respective leaders hoping to make a splash in the PBM business themselves.
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