One company in the healthcare system that deserves to fall to the mighty sword of the new Trump administration is Express Scripts. (NASDAQ:ESRX) has used their position as the nation’s largest PBM to make itself into
“The reason drugmakers sharply raise list prices without a corresponding increase in net price is that PBMs demand higher rebates in exchange for including the drug on their preferred-drug lists”
— Enrique Conterno, President, Eli Lilly diabetes business
The rate of growth of PBM rebates from 2013-2015 is double the rate of growth of gross drug spending
Often, the Part D sponsor or its pharmacy benefits manager (PBM) receives additional compensation after the point-of-sale that serves to change the final cost of the drug for the payer, or the price paid to the pharmacy for the drug. Examples of such compensation include rebates provided by manufacturers and concessions paid by pharmacies.
As the growth of rebates and other price concessions places more of the burden on beneficiary cost-sharing, Medicare’s costs for these beneficiaries also grow.
The growing use of rebates and other price concessions has contributed to an important shift in how Part D spending is distributed across the final three phases of the part D benefit
Rebates and discounts biopharmaceutical companies pay to PBMs and payers do not directly reduce cost-sharing for these patients.
As Medicare drug costs spiral out of control, the percentage of pharma spending Express Scripts extracts from rebates is far greater than its peers, and expanding.This sum is now approaching $100 per person per year for every citizen in the U.S. Ironically, ESRX diverts huge cash flows from companies that actually invest in innovative R&D into “kickbacks” for themselves. They create no new or improved drugs.
The problem is so obvious we read in today’s WSJ:
“Merck has offered higher rebates and discounts to pharmacy-benefit managers so that they would keep Merck products on preferred-drug lists”
/wp-content/uploads/2017/01/esrx-gotti.jpg467663Citron Research/wp-content/uploads/2017/05/CitronLogo2017-350x65-1.pngCitron Research2017-01-27 07:31:512017-05-29 05:03:00Express Scripts: Rebate System is a Financial Engineering Kickback Scheme