Health insurers and pharmacy benefit managers (PBMs) are hoping recent mergers and their growing market clout will help them win steeper drug discounts in their ongoing war with the pharmaceutical industry over specialty drug pricing.
However, they're still struggling to come up with effective new strategies to overcome the pricing power that drug companies are exercising with the new and usually better therapies they are bringing to market.
“It's all about scale and clout for either being able to stand up to the supply chain or stare down the supply chain,” said Dr. Glen Stettin, senior vice president of clinical, research and new solutions at Express Scripts, one of the largest PBMs in the U.S.
Some drug companies have conceded that their products' buyers are turning up the heat. David Epstein, a top executive at pharmaceutical giant Novartis, told investors this month the company is seeing “price pressure” from payers. But even after gaining a few concessions, payers worry that the pricing discounts they gain won't be enough to make a significant difference in drug spending.
The CMS said last week that prescription drug prices were a major reason for the sharp rise in healthcare spending from a historically low growth rate in 2013 to 5.5% annual growth in 2014. Drug spending in 2014 jumped 12.6%, the highest rate since 2002. Though it's scant consolation, the public backs insurers on the issue. Three-quarters of Americans say prescription drug costs are “unreasonable,” according to a June poll from the Kaiser Family Foundation, with half the public blaming drug companies for the problem.
Gilead Sciences' blockbuster hepatitis C drugs, Sovaldi and Harvoni, have become the poster children for rising drug costs. The next battle lines have already been drawn for a new class of costly drugs called PCSK9 inhibitors, injectable drugs that treat high cholesterol.