PBM-Owned Mail Order Pharmacies Are Lot More Expensive Than Retail Pharmacies, WSJ Says

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I’m tempted to just post a link to the great, new Wall Street Journal story laying out how mail-order pharmacies appear to be consistently charging far more for generic drugs than retail pharmacies, then paste in a Simpson’s gif, and just call it a day. 

But the piece deserves a little more than that, though it feels like it’s kick-PBMs-in-the-shins week. 

The meat of the WSJ story is data from Antonio Ciaccia and 3 Axis Advisors (natch) that found that prices in the mail-order channel were, on average, three times higher than those seen in retail pharmacies. 

That “three times higher” number masked some extremes, though. The article said markups could be as high as 35 times, and it cited a specific example of a scrip for generic Prozac that ran $100 through a mail-order pharmacy and only $12 from Mark Cuban. 

The underlying scandal here is that most of these mail-order pharmacies are owned by the PBMs, making all of this look like just another trick to extract dollars from the system. 

The WSJ provided the PBM’s industry defense: mail order options “save employers on prescription drugs and their convenience helps ensure patients take their medicines.” They also took a swipe at the 3 Axis numbers. 

Whether that’s a plausible argument is in the hands of employers, I guess.

I’ve written a bit about how the prices fixed under the IRA will engender different reactions depending on your expectations and sophistication. You could imagine a situation in which CMS slashes the price of the insulins on the list by 90% … and that might be higher than what the company is already getting. 

Part of the issue with handicapping this is that no one is quite sure what the average net prices -- effectively the ceiling price for most of the IRA drugs -- actually are. But a new paper from UCSD’s Inmaculada Hernandez tries to estimate what those ceiling prices will actually be.  

I can’t vouch for the net price numbers -- they seem high to me -- but the article also includes what other federal payers (the Big Four) are paying, which is a useful datapoint. I don’t think that this is likely to be hugely useful in actually predicting what CMS will do. 

But it’s a useful grounding in how to think about the guardrails around the price-setting process.

• I like this Health Affairs Forefront piece that shows deep thinking about the best ways of gathering patient input as part of the next round of IRA price-setting. The suggestions feel like common sense -- be more iterative, make sure patients understand how their thinking impacts the process, etc. -- but having them spelled out will, hopefully, provide a template for CMS to follow. 

• I suspect that we’re nowhere near done with the PBM-related commentary sparked by the NYT piece. This post from ATI’s Anna Kaltenboeck is illuminating. Kaltenboeck is a longtime pharma industry skeptic, so her perspective on PBMs is a bit distinctive from other hot takes. 

• The Bernie/Novo Nordisk showdown is now officially on the calendar for Sept. 24.

Header image via Flickr user Moosealope.

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