Testifying Tuesday before the Senate Finance Committee, the executives sharply objected to claims that rebates paid by the manufacturers to the pharmacy benefit managers do not get passed on to consumers facing rising drug prices.
Mike Kolar, the interim president and chief executive officer of Prime Therapeutics, said in prepared testimony, that he “disputes the idea that rebates are the primary cause of high list prices. Indeed, many drugs have high and significantly increasing list prices without offering any rebates.”
Ohio Democratic Sen. Sherrod Brown, a member of the Senate panel, told the PBM executives: “It’s not exactly breaking news that Ohioans don’t trust pharmacy benefit managers … I can’t say I blame them.”
The hearing once again highlighted the split between drug manufacturers and pharmacy benefit managers on who is to blame for rising prescription prices.
Pharmacy benefit managers insist on rebates from the manufacturers in return for including their drugs in pre-approved health care plans. Critics charge the pharmacy benefit managers pocket some of the rebates or other money obtained from drug manufacturers rather than passing them all to the consumer.
In February before the same Senate panel, the senior executives of seven major pharmaceutical companies said they could lower drug prices if the Donald Trump administration adopts a proposed rule that would eliminate rebates paid by the manufacturers to middlemen in the drug supply chain, primarily pharmacy benefit managers.
U.S. Health and Human Services Secretary Alex Azar has proposed a rule that would enable drug manufacturers to pass rebates and other discounts directly to consumers. He called the money going to PBMs “a hidden system of kickbacks to middlemen.” The rebates represent 26 to 30 percent of a drug’s list price, Azar said.
The HHS proposal would specifically remove “safe harbor” protections from the Anti-Kickback Statute for rebates paid by manufacturers to PBMs and Medicaid managed care organizations. The plan would create a new safe harbor for prescription drug discounts offered directly to patients, as well as fixed fee service arrangements between drug manufacturers and PBMs.
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