Companies should reduce the price of weight loss drugs

Last month, three leading pharmacy benefit companies made commitments to Senator Bernie Sanders, chairman of the Senate Health, Education, Labor and Pensions Committee – ahead of a recent congressional hearing in which major drugmaker Novo Nordisk testified about the company's popular pricing GLP-1 Drugs – that they are committed to facilitating access to these drugs if Novo Nordisk (and other GLP-1 drug manufacturers) decide to increase the price of certain GLP-1 drugs for health insurance purposes to $100 or less per patient per month to reduce sponsors.

Pharmacy benefit managers are already working to negotiate lower costs for GLP-1. Still, greater progress for all patients cannot be achieved without pharmaceutical companies first lowering their list prices.

Once a drug company sets a list price, PBMs negotiate with the drug company to keep the net cost—the amount that employers and plan sponsors pay for prescription drugs they pay for the people in their health plans—as low as possible. Meanwhile, pharmaceutical companies' list price decisions are based on their profit incentives, spending needs and other factors under their control.

Big Pharma must put patients over profits and significantly lower price as a starting point for negotiations with PBMs to ensure access and affordability for health insurance sponsors and the individuals and families who rely on them for health insurance. In other words, unless a pharmaceutical company also addresses the net price of the drug, there will be little progress.

This latest exchange is a clear example of how pharmaceutical companies are using PBMs as a scapegoat for why they “cannot” lower prescription drug list prices. This is factually incorrect. Countless analyses, including an analysis using data from the Centers for Medicare and Medicaid Services of the top 250 brand-name drugs in Medicare Part D, confirm that price increases by big pharmaceutical companies have nothing to do with PBM negotiations.

By moving away from anti-competitive practices such as abusing the patent system to prevent more affordable alternatives from coming to market, pharmaceutical companies can charge whatever price they want for their products. If a drugmaker lowers its prices, it still has to compete with other GLP-1 manufacturers for drug placement – competition is a good thing and puts downward pressure on drug companies to lower their prices.

Meanwhile, PBMs are using their specialized pharmacy benefits expertise to actively support employers who adopt GLP-1 for people who want to lose weight. While the decision about coverage rests with the employer and plan sponsor, PBMs of all shapes and sizes (and there are 70 PBMs in this country competing for employer contracts) offer them comprehensive programs to help the right patients access these treatments overall with services that help to maximize the chances of long-term treatment success.

Bottom line: In order to provide patients with lower prescription drug costs, pharmaceutical companies must do their part and reduce the list prices of the drugs they produce.

JC Scott is President and CEO of the Pharmaceutical Care Management Association/InsideSources