PBMs increasingly under fire in drug-pricing battle

[Max Zolotukhin/Adobe Stock]

As the national debate over drug pricing ramps up, Pharmacy Benefit Managers (PBMs) find themselves squarely in the spotlight. PhRMA, which has also criticized hospitals for marking up drug prices by as much as 500%, launched a seven-figure ad campaign targeting proposals in Congress to lower drug prices.

PhRMA, which counts companies such as Pfizer, Novartis, and Merck & Co. as members, finds itself on the defensive as the federal government and the public demand greater transparency and accountability in drug pricing. A recent study from KFF found that 82% of adults believe the cost of prescription drugs is unreasonable.

As prices for new drugs continue to soar, PhRMA is taking a proactive approach in its messaging. Instead of touting innovation as it has done in the past, the ____ is ramping up attacks on intermediaries like PBMs as driving up costs.

For instance, in a recent PhRMA ad titled…

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A timeline of Merck’s legal battle over Medicare negotiation

[Photocreo Bednarek/Adobe Stock]

Marking the first legal challenge of its kind, pharma giant Merck & Co. took to the courts on Tuesday, directly contesting the U.S. government over the Medicare drug price negotiation program. The Big Pharma company’s lawsuit, filed in the U.S. District Court for the District of Columbia, contends the program’s basis — the Inflation Reduction Act (IRA) — infringes upon the Fifth and First Amendments of the U.S. Constitution.

The legislation has put pricing pressure on the industry and contributed to a wave of recent M&A deals.

Merck, and the wider pharmaceutical industry, are raising the alarm. They claim the law, in effect, coerces drugmakers into accepting below-market rates. The lobbying group PhRMA (Merck is a member) released a statement in April 2023 arguing that the Inflation Reduction Act threatens patient access and complicates R&D efforts.…

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CMS retreats from ‘most favored nation’ drug pricing scheme

Former President Trump’s plan to peg the price of some drugs to those paid in other developed nations was always controversial. Not long after Trump unveiled an executive order supporting the idea on Sept. 13, 2020, organizations, including PhRMA and Regeneron, filed lawsuits to block the rule.

Several courts agreed that the policy, which CMS codified in November 2020, had procedural issues. Namely, the agency provided less time for involved parties to comment on the rule than the Administrative Procedures Act prescribes.

HHS predicted the rule would save the federal government $85 billion over the next seven years.

Now, the Biden administration is moving to revoke the interim final rule that would have enacted the rule.

It remains unclear, however, what scheme to reduce drug pricing might follow. The Biden administration has stated that it is eyeing ways to reduce spending on Medicare Part B drugs.

The ‘most favored nation’ rule was not ju…

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