Pharma

Pharma execs and PBMs blame each other for rising insulin prices

The hearing brought together execs from the largest insulin makers and PBMs.
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Hannah Minn

· 3 min read

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Executives from top insulin makers Eli Lilly and Company, Novo Nordisk, and Sanofi testified alongside the three largest pharmacy benefit managers (PBMs)—CVS Health, Optum Rx, and Express Scripts—in a Senate Health, Education, Labor, and Pensions (HELP) Committee hearing Wednesday over the drug’s increasing prices.

The hearing provided few solutions on how to make insulin more affordable, as the pharma executives and PBMs blamed each other for the high drug prices, echoing arguments made in 2019 that brought the same companies in front of Congress.

“If somebody in the real world is watching this hearing, they have heard every single person from the drug companies and from the PBMs say, ‘We are working tirelessly to lower the cost of prescription drugs, just knocking our brains out.’ And yet, at the end of the day, 1.3 million Americans are rationing their insulin,” HELP Committee Chairman Sen. Bernie Sanders said in the hearing Wednesday.

The insulin makers argued that higher rebate demands from PBMs have pushed list prices up. Drug manufacturers give PBMs rebates in exchange for preferential placement on a health plan’s list of approved medications. For every $1 increase in rebates, the list price of a prescription drug goes up $1.17 on average, according to a 2020 study from the University of Southern California.

“We’ve led the way on affordability against the headwinds of a healthcare system that unfortunately can incentivize others to prefer higher list price medicines. Higher list prices allow for higher fees and rebates, which can increase patients’ out-of-pocket costs while benefiting employers, insurance companies, and people who don’t use medicines,” Eli Lilly CEO David Ricks said.

All three of the top insulin makers announced in March that they would cut the net prices of insulin following years of pressure from consumers and politicians.

Executives from the top PBMs pushed back, saying negotiations and competition ultimately drive prices down.

“Rebates are discounts we negotiate to lower prices,” Express Scripts President Adam Kautzner said. “Without the ability to use this negotiating tool to achieve lower drug costs, healthcare spending would be much higher. Drug competition is ultimately what drives rebates, lower list prices, and lower net costs.”

Steve Miller, former EVP and chief clinical officer at Cigna Corporation, the parent company of Express Scripts, made a similar argument in front of the Senate Finance Committee in 2019.

“In the system today, rebates are used to reduce health care costs for consumers,” Miller said in his statement to the committee.

Senate Finance Committee leaders introduced legislation in 2019 that would require public disclosure of price negotiations that PBMs had made, but the bill did not move forward.

Congress is again trying to push for PBM reforms. Sens. Sanders and Bill Cassidy introduced legislation earlier this month requiring PBMs to pass 100% of rebates back to their health plans.

Navigate the healthcare industry

Healthcare Brew covers pharmaceutical developments, health startups, the latest tech, and how it impacts hospitals and providers to keep administrators and providers informed.