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'Alice in Wonderland' Drug Pricing

by John Norton | Aug 07, 2017

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A patient wants a lower-cost generic prescription drug. The patient's doctor agrees. But the pharmacy benefit manager (PBM) may have other ideas.

Welcome to the upside-down world of today's drug pricing, where, as in Lewis Carroll's classic Alice In Wonderland, reality is distorted. Even when a generic is preferred, PBMs find ways to keep dispensing costly brand-name drugs.


ProPublica and The New York Times collaborated ("Take the Generic Drug, Patients Are Told—Unless Insurers Say No") to report on the disturbing trend of name brands being picked over generics—specifically the case of patients being denied the generic version of Adderall Rx by PBMs in favor of the brand version. There is no justification for this. It's about PBMs getting rebates from the brand manufacturer for ensuring its drugs are dispensed.

In a related story, further evidence of the rebate-obsessed PBM strategy is seen in a Wall Street Journal report tackling PBMs' unhelpful role in the treatment of anaphylactic reactions ("Behind the Push to Keep Higher-Priced EpiPen in Consumer's Hands"). A while back, the manufacturer of EpiPens, Mylan, received withering criticism for price spikes over the past couple of years. Even with generic competitors entering the marketplace, the brand version is still getting dispensed at a similar rate. The article blames PBM rebates, which are hard to track or understand due to a lack of transparency.

The National Community Pharmacists Association has been banging the drum loudly about PBMs' questionable profit-maximizing practices. PBMs act like divulging information about their operations is a highly-classified state secret. These two articles are the type of third-party validation we need to continue to inform the public and spur lawmakers into action. Solving the problem of high prescription drug prices is complex, but PBM transparency is an excellent place to start.