On February 8, 2024, the CEOs of Johnson & Johnson, Bristol Myers Squibb, and Merck were challenged by the U.S. Senate HELP (Health, Education, Labor, & Pensions) Committee to disclose their reasonings for the outrageous drug pricing in the U.S. They discussed the role of PBMs, patents, free market apprehensions, advertising budgets, and concerns regarding how Medicaid and Medicare can cover these expensive drugs. Amidst the heated conversations, Sen. Bernie Sanders confronted the Big Pharma CEOs with a powerful, and resonating, statement: “Your lifesaving drugs mean nothing to millions of Americans who cannot afford them.”

Naturally, Big Pharma’s response was the recurring narrative that their commitment and investment is focused on “Research & Development”. While R&D is necessary to advance the potential for upcoming and currently listed medications, the term is also often used as a scapegoat for where profits are being allocated while little to no proof is required for that spending.

The Senate countered this claim by highlighting the exorbitant amount of money that they are also spending on advertising costs, patent extension and lawsuits, and shareholder profits. As an example, Sen. Chris Murphy pointed out that Johnson & Johnson allocated $17 billion toward stock buybacks and dividends while only dedicating $14 billion to R&D efforts.

Backpedaling, Big Pharma then points the blame on the traditional PBMs, stating that the actual cost of medications have not increased substantially, rather it’s the PBMs that are hiking up the prices and taking more than the lion’s share. While some fault might lie with the PBMs, both parties are complicit in the action. These conversations are ineffective and do not lead to any tangible solutions. So, in a situation where everyone is complacent, everyone is making money, and no one’s bottom line is being impacted, why are they even involved in this conversation? The problem is that the user of the service and the payer of the service have been taken out of the dialogue.

If you want to solve this, talk to the people who are in the middle of all of it. As an advocate for affordable healthcare solutions, particularly in the prescription drug space, I would start with significant fundamental changes to the unchecked spending of pharmaceutical advertising and the corrupt relationship between PBMs, the manufacturers, and rebate programs.

Reducing Advertising Costs

The United States is one of only two countries in the entire world that allows for pharmaceutical drug advertising. The amount of exposure that Americans get to these advertisements is overwhelming. Nielsen estimates that, on average, 80 pharmaceutical ads air each hour on television. And not only are audiences inundated with clever and hopeful marketing messages, they are being guided to medications that can charge significant amounts of money despite having insurance coverage.

This doesn’t even begin to touch the surface of how Big Pharma’s ad spend can manipulate the media companies, influence consumer behavior, and more. Big Pharma has surpassed $8 billion spent on advertising annually and their primary goal is not to help the consumer, but to sell the product. Think of the medical advancements that could be made if that money was redirected into actual R&D.

Eliminating Rebate Programs

PBMs negotiate formulary placement and in doing so extract bribery from Big Pharma with rebates. Express Scripts, CVS, and Optum control 80% of the entire population’s access to drugs so if the manufacturer’s drug is not on one of their formularies, a third of the U.S. population does not have access to available medications. Formularies should be based upon clinical effectiveness and value, not bribery. If a drug works better than another drug, then it should be on the better version of the formulary because of its efficacy. They are not negotiating drug prices; they are negotiating rebates.

In my opinion, Congress should stop allowing rebates to exist at all and make them just as illegal in the healthcare industry as they are in many others. You cannot pay for performance in any other industry but somehow healthcare, specifically the PBM world, has found a loophole. Traditional PBMs would lose their minds if they had to give up rebates because everything they do is dependent on them as they add significant value to both customers and shareholders.

Moving Forward

In short, there is a lot that needs to be done to reign in the unprecedented spending of Big Pharma, but the fact that our government is beginning to take note of public outcry is promising. We’re here to convince leaders to bring the right voices to the table.

We have to get the government and the media out of Big Pharma’s pocket. I would love it if SHARx didn’t have to exist and that Americans had affordable access to life-saving medications no matter their income but until that becomes a reality, we’ll keep fighting the fight and continue advocating for those who need us.

The post The Solution to High-Cost Drug Pricing in the U.S.: Having the Right Conversations appeared first on SHARx.

The pharmaceutical industry has an ethics problem, but if you listen to many of the “talking heads” for Big Pharma, they will have you believe that it is the employers, looking for solutions so they can maintain/achieve financial solvency while doing right by their employees, that are being “unethical”.

Under the Insurance Umbrella

In the United States, pharmaceuticals are jammed under the insurance umbrella because most Americans need insurance coverage to help cover the cost of their prescriptions. However, many people paying for health insurance struggle to exist in a state of financial security. It is difficult for many individuals, but it is often even tougher for employers, tasked with carrying coverage for all or many of their employees, some of whom are taking high-cost medications.

Illusive Value

The insurance machine creates dependency on itself by making it seem like we need it to survive. Health insurance advertises itself as a method to protect individuals from health risks and businesses from financial ruin. Armed with the illusion of value and convenience, it leads many people to believe they have a network of support. 

The Network is Broken

The sad reality of the situation is that the insurance system/network is broken. Traditional Pharmacy Benefit Managers (PBMs) manage this network and the top seven PBMs have a 96% market share while all the other PBMs fight over the remaining 4%.

These popular PBMs have deals with thousands of pharmacies nationwide and patients can go to them for their needs. Additionally, they answer the phone calls and adjudicate claims, which can give the impression that they have the public’s best interest at heart. However, they also negotiate with the manufacturers. This negotiation is for a floor position on the formulary which is essentially a tiering system of bribery. If you are unfamiliar with the term “formulary”, it refers to a list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits. It is sometimes referred to as a “drug list”.

Playing the Game

If a drug is in the formulary, then a member can get their drug since someone will pay for it. The PBMs hold all the power and are on board with this set-up as long as the manufacturers continue to pay them. If that ever stops, the manufacturer believes they are out of the game. This is why the manufacturers continue to raise their prices, to satisfy the PBMs appetite for larger rebates and increase profit for shareholders when they can.  

While PBMs and drug manufacturers are playing power games with each other, employers and individuals are the ones coming out on the losing end. 

Whose Money Is It?

The user of the drug and the payer for the drug have no seat at the table whatsoever. Health insurance networks and carriers can play, but they are not playing with their own money. Whose money is it you might ask? The employer’s. The employer pays the premiums and claims. This is part of why we get the cluster that is the U.S. healthcare system. It is understood that the worse things get from a health perspective, the more profitable it is for Big Pharma. 

Stuck in the Cycle

Employers are stuck in the vicious cycle of what the United States healthcare system has become. If you ask yourself, “Why am I using insurance to pay for things that are routine and expected?”, the answer does not make much logical sense. Employers are forced to go outside of the system since they have limited options to escape the cycle. 

The Ethical Solution

Employers are forced to make tough decisions, such as to exclude certain drugs from their healthcare plan because they cannot afford the medications and sustain the nonsense. SHARx is the service that employers otherwise would not have to ensure their employees are taken care of.

Employers are making the choice to stop playing the insane game in a nonpainful way. It is about realizing that when health care budgets cannot be predicted or controlled, things suffer. Procurement and enhancing the experience of the member is the answer.

At SHARx, we have a passion to take care of the lost members in the system that was never designed to serve them and who are not being taken care of. We make sure that members get what they need in an affordable way. We strive to allow businesses to be sustainable and have solvency moving forward.

With SHARx, it is possible for employers to do what is right for the people who matter most – their employees.  

The post Remaining Ethical in an Unethical Climate appeared first on SHARx.