Leading pharmaceutical benefit management companies are rolling out “forward” payment plans in the face of growing concerns that health insurers, employers, plans government processes and patients are overpaying for prescription drugs.
Cigna’s Express Scripts is marketing a new, “completely transparent” pricing option called ClearCareRx, which allows employers, insurers, and government programs to pay a flat fee every day. months to process pharmaceutical claims, the company announced in a news release on Wednesday. The second-largest PBM will only charge the pharmacy what they pay for the drug and pass on rebates from the drug manufacturers.
Express Scripts has tested this model with several large, self-insured employers over the past few years and has reduced their prescription spending while improving patient outcomes, a Cigna spokesperson wrote in an email. .
A spokesperson for UnitedHealth Group launched a similar option system for commercial customers this year, a spokesperson wrote in an email. CVS Health’s Caremark did not respond to a request for interview, and the Pharmaceutical Care Management Association, a PBM trade group, declined to comment on individual companies’ business decisions.
Caremark, Express Scripts and OptumRx control 80% of the PBM market by 2021, according to the most recent data from Drug Channels, a research organization.
The forward payments that Express Scripts and OptumRx are promoting are different from the industry standard of “price difference,” in which PBMs charge payers more than they reimburse pharmacies and withhold the portion. difference. Regulators and lawmakers increasingly cite arbitrage pricing as a contributing factor to rising drug costs.
The Federal Trade Commission, the House Oversight and Accountability Committee, and numerous Senate panels have investigated PBMs, paying particular attention to arbitrage pricing. Ohio and other states have banned the practice and sued the PBMs, accusing them of overcharging for government programs.
“However, this move is welcome, but it does not resolve our lawsuit or remedy their anticompetitive practices. Things are going very well in court,” Ohio Attorney General Dave Yost (right) said in a news release Wednesday.
Duane Wright, senior government analyst at Bloomberg Intelligence, said ending arbitrage pricing could reduce PBM’s revenue by about $1 billion. Cigna lost the most: Express Scripts was responsible for 60% of the parent company’s operating profit last year. That compares with 37% for CVS and Caremark and 16% for UnitedHealth and OptumRx, according to data compiled by Wright.
“Given the huge role this division plays in the company, I think perhaps getting through regulations might be more urgent than some of the other players,” said Wright.
However, the financial impact on Cigna may be less than one thinks, said Antonio Ciaccia, CEO of drug pricing research firm 46brooklyn Research and president of consulting firm 3 Axis Advisors. Cigna can make up for lost revenue on the PBM side by shifting costs to other parts of the pharmaceutical supply chain it controls, such as group purchasing organizations, he said.
“They’re telling you, ‘This is how we make money,’ as if ‘we’ are just PBMs,” says Ciaccia. “These are large, vertically integrated, multi-layered companies. Unless they put each card on the table in each of those classes, it’s not transparent. It’s just an escape.”
In addition to the forward payment plan, Cigna undertakes to further disclose its fees and publishes that information on a website and discloses that information to the Securities and Exchange Commission. Express Scripts will also limit out-of-pocket costs to $5-$45 per prescription.
These initiatives may be too little, too late, to convince policymakers, Wright said. Wright said drug pricing provisions from the Inflation Reduction Act of 2022 emphasize the role of drug companies, while some lawmakers may be willing to expand their efforts. “Their next vision is other parts of the supply chain. That would be PBM,” he said.
Venture-backed PBMs like CapitalRx, SanaRx and Navitus are taking advantage of negative feelings about their major competitors to tout their own forward payment models, Ciaccia said. attract customers, Ciaccia said. At the same time, these small players depend on the big companies because some partners with GPOs that Express Scripts and other large PBMs own to access their deal, he said.
