Business Insider: A huge pharma middleman just lost its biggest customer — and it shows how drug pricing really works

May 2, 2017

Business Insider: A huge pharma middleman just lost its biggest customer — and it shows how drug pricing really works

Business Insider

Lydia Ramsey and Skye Gould

Apr. 25, 2017, 6:57 AM 29,013

Express Scripts is losing a big customer. Anthem, the big health insurer, is ending its contract with the company following a 2016 lawsuit. 

Anthem claimed Express Scripts overcharged the insurer by billions of dollars. Anthem contracts with pharmacy benefit managers (PBMs) like Express Scripts to help negotiate lower prices for prescription drugs. Anthem accused Express Scripts of not passing along those savings, claiming Express Scripts overcharged the insurer by billions of dollars. Anthem is responsible for roughly 18% of Express Scripts' revenue. 

The relationship between Anthem and PBMs like Express Scripts shows that it's not just drugmakers that are to blame for the rising price prescription prices.

For a single prescription drug, there are often five companies involved, from development all the way to your medicine cabinet. Each company makes a tidy profit along the way. And as prices increase, so do those profits.

"The current model is costing health plans, employers, and consumers much more money than it needs to," said Michael Rea, the CEO of Rx Savings Solutions, which works with consumers and employers that are paying for healthcare understand their drug prices.

Let’s take a hypothetical drug called Pretendar. It’s used to treat lackofimaginationia, and it’s taken once daily. A 30-day supply has a list price of $100 a month for a person with a commercial insurance plan that covers all but a $20 co-pay.

That's the how. Now here's the why.......  Click here to view the full article

 

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