Pharmacists United for Truth & Transparency ("PUTT") is a non-profit advocacy organization founded by independent pharmacists and pharmacy owners devoted to exposing what they describe as anti-competitive tactics deployed by the largest Pharmacy Benefit Managers (PBMs - aka Pharmacy Benefit Companies or PBCs as the trade organization known as the Pharmaceutical Care Management Association or PCMA has tried to rebrand its industry since the acronym PBM has become toxic) recently published an opinion piece with an interesting title: "The Deadliest Addiction in the U.S. Isn't What You Think It Is" (read it at https://puttrx.medium.com/putt-opinion-the-deadliest-addiction-in-the-u-s-isnt-what-you-think-it-is-34a0343d189b for the full piece).
In fact, PUTT even operates an online store they call The PUTT Shop with some merchandise like this button:
The PUTT opinion piece argues that the deadliest addiction in the U.S. is prescription drug kickback money (and I happen to agree with that assessment), with habitual abusers including the largest commercial health insurers; their Pharmacy Benefit Managers (PBMs); and a coterie of benefits brokers and consultants who help themselves not once BUT TWICE to money flows paid in good faith for services ostensibly rendered — on both sides of the negotiating table. Money that arguably could be going to lower drug costs, offset premiums, or even to research disease and develop new medications. Instead, kickback money abusers are prime catalysts for pharmacy deserts across the country, patient bankruptcy, worsening illnesses, and various healthcare small business deaths.
In fact, I believe that PUTT's argument is one of the more compelling pieces I have read on this subject in a while and I believe it is being factual.
The reality is that at present, no regulatory oversight of PBMs exists (this is unique in the healthcare supply chain). It seems really hard to believe, but the reality is that is factually correct. The biggest PBM industry entities have grown primarily by acquiring their rivals, but not by offering superior or less costly products/services. The PBMs use opacity into what they do (I can't help but think of the scene from "The Wizard of Oz" whereby the group comes to speak to the Wizard, and the dog pulls a curtain revealing a man who tells them to "Pay no attention to that man behind the curtain!") to keep their no-longer-so-little kickback scheme going. It's no wonder Americans have been complaining about prescription drug prices relentlessly for years, and yet we seemingly never see any material changes. But it's starting to look as if recent developments have emboldened pharma to tell PBMs take a long walk off a short pier. We are already now seeing it with insulin, and this month, we're also seeing it happen with Mark Cuban Cost Plus Drug Company and Coherus BioSciences offering customers a biosimilar of Humira branded as Yusimry (adalimumab-aqvh) at an 85% discount to the branded medicine. Of course, we could see more of this in countless other therapeutic categories, but it's a step in the right direction.
Part of the reason is because the excess complexity of the U.S. prescription drug market perpetrated by vertically integrated PBM's and a concurrent PR strategy by the PBM trade organization known as the Pharmaceutical Care Management Association (known by the acronym "PCMA") has invested considerable sums over the years to persuade policymakers and the public that the reason prescription drug prices in the U.S. are so high is "anyone-but-us" attributed to pharma setting drug prices high without ever acknowledging the reason the industry sets list prices so high in the first place: so they can rebate it all back to PBM's. In other words, the PBM trade organization has successfully shifted the view that the monopolists in the equation is big pharma, rather than the PBMs in the middle of the cash-flow transaction. It worked for a while, but it's starting to end. Anytime someone tries to hide a quarter of a trillion dollars in cash, some entity or entities discover it and enter the space.
Everyone has heard stories of runaway prices for EpiPens and insulin (insulin has been on the market since the 1920's, so it's not really a new or improved medicine; in fact, at best, we've seen a few incremental improvements but not many recently). But the idea that insulin prices are so high is due mainly to pharma is a complete falsehood: academic research undertaken by the University of Southern California published in the November 2020 issue of JAMA Health Forum https://jamanetwork.com/journals/jama-health-forum/fullarticle/2785932, and researchers there offered one of the most comprehensive looks at the insulin distribution chain and showed exactly which players were profiting, by how much, all from selling insulin. The USC conclusion was that insulin's list price had indeed been going up, not down, with a host of "trade secrets" and other protections preventing many researchers from pinpointing exactly who was receiving profits from its sale. However, USC researchers essentially reconstructed the cash-flow using available data. It concluded that realized "net" price — what manufacturers receive after accounting for all the discounts and payments to distribution system entities — had been falling. USC researchers analyzed the flow of money across all distribution system participants — manufacturers, wholesalers, pharmacies, PBMs, and health plans — and found that middlemen in the distribution process (with the largest piece going to PBMs) were then taking home approximately 53% of the "net" proceeds from the sale of insulin, up from 30% in 2014. Meanwhile the share going to insulin manufacturers had fallen by 33% over the same period of time.
PUTT https://www.truthrx.org/patientinformation/ provides the following graphic using insulin (it also has another one for EpiPens) with estimates of how much of every dollar are going to different parties for a single vial of Humalog. The price is a fair amount higher than I ever saw, but it could be true in rural areas with a single independent pharmacy; I have no personal experience with that.
Incidentally, thanks to a series of unrelated events, insulin prices are now coming down (and rather substantially), and the reasons are due to biosimilar competition, as well as the FDA formally passing a final rule on March 23, 2020 (see https://www.fda.gov/news-events/press-announcements/fda-works-ensure-smooth-regulatory-transition-insulin-and-other-biological-products/ for more), whereby an application for a biological product which was originally approved under the Federal Food, Drug, and Cosmetic Act (FD&C Act), including applications for insulins and other biological products were deemed to be a license for the product under the Public Health Service (PHS) Act which governed most other biologic medicines. That, for the first time, enabled submission of applications for products that were proposed as biosimilar to, or interchangeable with, the transitioned products. As such, the transition of insulin products from approved drug applications to deemed biological product licenses formally opened up those products to potential biosimilar and interchangeable competition.
Of course, that also required a number of publicly-held (or, in the case of one entity, a formerly publicly-held) companies which have publicly disclosed via SEC filings, press releases, investor presentations, etc. their plans to sell insulin biosimilars. Among them include: Sandoz/Gan & Lee, Amphastar Pharmaceuticals, Inc./ANP, Lannett Company, Inc./YiChang HEC ChangJiang Pharmaceutical Co., Ltd., an HEC Group company, and the CivicaScripts operating unit of the Lehi, UT-based Civica, Inc./GeneSys Biologics. All of them will rely on offshore partners to make the Active Pharmaceutical Ingredients (APIs).
Of them, Civica is unique in that the company has what it calls a Unilateral Pricing Policy ("UPP") that sets a Maximum Retail Price (MaxRP) for all CivicaScript products which is printed on all packages which patients can see clearly (currently, it applies to the prostate cancer drug abiraterone acetate 250 mg tablets but will soon apply to insulin glargine, insulin lispro and insulin aspart). Violations or refusal to participate in CivicaScript's UPP could result in loss of ability to purchase CivicaScript products (see https://civicascript.com/upp/ for more). Civica announced plans to sell biosimilars of the three bestselling insulins (glargine, aspart, and lispro) in March 2022. For Civica's/GeneSys Biologics' three planned insulin biosimilars, the MaxRP's were already announced at $35/vial or $55 for a box of five prefilled insulin pens (see the press releases at https://www.businesswire.com/news/home/20220303005321/en/Civica-to-Manufacture-and-Distribute-Affordable-Insulin/ AND https://www.prnewswire.com/news-releases/jdrf-announces-support-of-civica-to-manufacture-and-distribute-low-cost-insulin-301495050.html for details; Civica has also licensed Ypsomed AG's UnoPen design) with a stated goal of "lowering the cost of common, but high-cost, generic medications and increase price transparency of these medicines throughout the U.S. supply chain."
On March 1, 2023 Eli Lilly & Company, Inc. https://www.prnewswire.com/news-releases/lilly-cuts-insulin-prices-by-70-and-caps-patient-insulin-out-of-pocket-costs-at-35-per-month-301758946.html, then on March 14, 2023 Novo Nordisk, Inc. https://www.prnewswire.com/news-releases/novo-nordisk-to-lower-us-prices-of-several-pre-filled-insulin-pens-and-vials-up-to-75-for-people-living-with-diabetes-in-january-2024-301771409.html and on March 16, 2024 Sanofi-Aventis U.S. LLC (and its subsidiaries) https://www.globenewswire.com/en/news-release/2023/03/16/2629188/0/en/Press-Release-Sanofi-cuts-U-S-list-price-of-Lantus-its-most-prescribed-insulin-by-78-and-caps-out-of-pocket-Lantus-costs-at-35-for-all-patients-with-commercial-insurance.html each announced major list price cuts for their branded and unbranded insulins (duplicates sold under the generic drug name in an effort to bypass PBM-driven price markups), and to pay for those price-cuts, the branded insulin manufacturers would simply disintermediate the PBM's from the transactions. In other words, they would slash prices and to pay for the price-markdowns, simply cut the PBM's out of the transaction. No harm to big insulin, but for rebate-aggregating PBMs, that was a big loss of rebate kickback dollars (oh well...). The price cuts are currently working their way through the convoluted prescription drug distribution system, but are expected to become reality no later than 2024.
Right now, U.S. patients can buy Novo Nordisk Fiasp for $35/vial with a NovoCare coupon from https://www.novocare.com/diabetes/products/fiasp/savings-offer.html, unbranded Lilly Humalog sold as Insulin Lispro Injection for $35/vial with a coupon from https://www.insulinaffordability.com/ or most any Sanofi (or Winthrop US) for no more than $35/vial https://www.teamingupfordiabetes.com/sanofidiabetes-savings-program anyway, but the recent price-cuts will disintermediate the PBMs from the transactions. For their part, the PBMs have already moved on to collecting kickbacks from Dexcom to exclude Abbott Freestyle Libre CGMs from United Healthcare's OptumRx formulary and from the formularies of Aetna/CVS Health/Caremark instead. Rebate aggregation is all the PBMs care about.
As Dr. Robert Popovian recently observed (see https://progressivepolicyinstitute.medium.com/are-we-on-the-cusp-of-a-new-drug-pricing-paradigm-fdf611c009b3):
For many years, we have called for such a revolution in pharma pricing as policy experts and economists. Why did we observe these drastic moves only now and not several years ago?
Unfortunately, until recently, the motivation within the biopharmaceutical industry to rethink the pricing model has been non-existent. Instead, the industry has focused on preserving the model while advocating for the passage of the concessions they provide to intermediaries directly to the patients. Why haven’t companies drastically cut prices and removed the rebate and fee from brand product prices? Especially products that have been on the market for several years and are in therapeutic classes with multiple competitors, which favors the rebating model and its misaligned incentives.
Executives in the biopharmaceutical industry have steadfastly protected the PBM business model [in what critics like me might describe as an unhealthy "co-dependent" relationship]. Until recently, the motivation within the biopharmaceutical industry to rethink the pricing model has been non-existent. Instead, the industry has focused on preserving the model while advocating for the passage of the concessions they provide to intermediaries directly to the patients.
We believe the un-intended elixir exerted from the legislative and regulatory changes has created a new business and regulatory environment, increasing the manufacturer's appetite to re-evaluate their pricing principles.
Clearly, direct and indirect action by policymakers, as well as the Federal Trade Commission (FTC) investigating the business practices of PBMs, including formulary construction and new research examining consequences of inappropriate formulary exclusions, have prompted renewed calls for evaluating the original intent of formularies, and additional political pressure is making the biopharmaceutical industry rethink its pricing strategy. While the industry gets 50% of the value of brand name medicine sold in the U.S., they get 100% of the political blowback from policymakers for their pricing strategies. The primary losers of the price cutting and new pricing will be PBMs and parties who benefit handsomely from high list prices, providing the highest rebate revenue. At the same time, the genuine payers in the marketplace — the patients — may finally have found a path to the savings they have been asking for.
We shall see if patient prescription prices start coming down across the board; it will happen with insulin and Humira biosimilars, but whether it happens in other therapeutic categories remains to be seen. Regardless, Pharmacists United for Truth & Transparency ("PUTT") remains focused on PBM anticompetitive business behaviors, and they are pushing for greater transparency. I would be inclined to say they have a lot invested in the FTC study and perhaps litigation which may be forthcoming as a result of that in the not-too-distant future.
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