Express Scripts hits back at criticisms of PBMs, says it 'would do just fine' without drug price rebates

Express Scripts, the country's largest pharmacy benefits manager, is challenging the rhetoric that paints PBMs as the villain behind the rising cost of drugs. 

Steve Miller, M.D., Express Scripts' senior vice president and chief medical officer, said at a briefing with reporters on Thursday that "it's really pretty crystal clear" that drug makers are behind soaring drug prices by controlling list prices. 

"No drug company has ever asked us for permission to raise the price of their drug," Miller said. "They can lower prices at any time." 

Steve Miller Express Scripts
Steve Miller (Express Scripts)

PBMs have been a key target in the debate over who's responsible for increasing drug prices. Critics, including the pharmaceutical industry, have argued PBM's take advantage of the current rebate negotiation structure to line their own pockets instead of passing savings on to patients. 

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PBMs and the payers they work with often use the savings from rebates to lower overall premiums instead of providing the discounts directly to patients at the point of sale.

As the Trump administration take steps to reduce drug prices, it is planning changes to the safe harbor protections for these rebates, which could lead to a significant overhaul in how drugs are priced and paid for. Details on the Department of Health and Human Services' plans remain scant as a proposed rule on the safe harbors remains under review at the Office of Management and Budget.

Inflated prices 

HHS Secretary Alex Azar has both defended and criticized PBMs and the rebate payment system. At a Senate hearing on the plan, Azar said that PBMs would be a key partner in reducing drug prices, and that reforms would allow them to do their jobs better. However, Azar also said that PBMs pose a major barrier to drug companies looking to lower prices. 

Reforming the rebate structure should seek to "normalize" rebate values and prevent excessive price inflation, Miller said. Some medications now, for example, have rebates of 50% or more, which can leave some patients on the hook for half of a medication's price out-of-pocket. 

The price of Epi-Pens is a prime example, Miller said.

RELATED: Azar blames PBMs for 'broken system' in Senate Finance hearing dominated by immigration debate 

Epi-Pens were at one time about $100 for a two pack at the pharmacy, before the price increased to $300 without a rebate option. The price was later increased to $600 with a $300 rebate, so patients still had to pay $300 out of pocket. 

Insulin is another example of this, where prices continue to increase while rebates do little offset to the out-of-pocket costs for patients, he said. 

Miller also noted that Express Scripts' 2017 drug trend report indicates that spending increased by just 1.5% for the commercially insured—data that the pharmaceutical industry has touted as proof that they're not significantly boosting prices. For 2018, so far, he said Express Scripts is on pace to see a lower increase of about 1.1%. 

However, Miller said, that is a 1.5% or 1.1% increase from a baseline that's already too high for many people.

Houts said that figure was not reached "through the philanthropy of pharma," even though they took credit for it. 

"We're not handing out trophies for 1.5%," he said. "They didn't earn that." 

A world without rebates?

Miller said Express Scripts "would do just fine in a world without rebates" if the administration decides to totally throw out that drug pricing approach.

However, he warned, ending rebates immediately instead of building a plan that phases them out or significantly overhauls them over time would be a major boon to drug companies. 

"How do you get there over a glide path versus making it go away overnight?" Miller said. "Making it go away overnight would be a windfall to pharma and a punishment to plan sponsors." 

RELATED: Senators press PBMs to clarify Azar's 'extremely disturbing' drug pricing allegations 

Express Scripts is not expecting the White House to completely toss drug price rebates in the rule, Jonah Houts, vice president of government affairs, said at the briefing. Houts said the rule could reflect the administration's interest in driving more outcomes- and value-based pricing for drugs, and changes to the safe harbor protections could push PBMs and drugmakers into such arrangements. 

He also said the administration could be considering ending the safe harbors for rebates that are over a certain percentage of a drug's price. That would set a potential drug pricing roadmap for pharmaceutical companies, he said. 

Based on their predictions, Houts said he doesn't foresee a "worst-case scenario" for PBMs in the rule.