The announcement of a new “collaboration” between two pharmacy benefit managers made headlines in the insurance world—but Dr. Adam J. Fein of Drug Channels Institute says the deal has serious implications for drug manufacturers and pharmacies, too, with the potential to cause major disruption in the industry.
The details: Cigna’s Express Scripts, a pharmacy benefit manager, announced a “collaboration” with Prime Therapeutics, another pharmacy benefit manager, to “deliver more affordable care for clients and their members by enhancing pharmacy networks and pharmaceutical manufacturer value.”
For those in the back: A pharmacy benefit manager, or PBM, is a third-party administrator of prescription drug benefits for a health insurer, responsible for things like contracting with pharmacies, negotiating discounts and rebates with pharmaceutical companies, and processing and paying claims for prescriptions.
What it means: This will essentially be the “biggest PBM ever,” says Dr. Fein—and will help the PBMs retain administrative fees based on the percentage of list prices in response to regulatory and legislative proposals intended to limit them.
How? By sourcing drugs through a “secretive” Switzerland-based purchasing organization (GPO), which wouldn’t be subject to the same regulatory/legislative changes.
Dan’s Deep Dive: All told, patients could pay more for drugs and health insurance premiums and receive less efficacious medical treatments. PBMs’ pursuit of rebates could also spill over into other areas of care, including specialty pharmaceutical products and cancer therapies. Down the road, these powerful conglomerates could effectively control pharmaceutical innovation and direct patients toward high profit margins rather than high-value care. – Dan Durham, BIO’s EVP for Health Policy
Click here for BIO’s detailed analysis of the deal and what it means for the industry, for patients, and for cures.
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