PCMA on drug prices and the pharmaceutical supply chain

The Pharmaceutical Care Management Association (PCMA) is the national organization representing pharmacy benefit managers (PBMs) in the United States. While PBMs often act as intermediaries between drug manufacturers, insurers, pharmacies and patients, the PCMA provides them with resources and tools to further support the companies PBMs work with.

In the latest episode of Over the counterJohnny Garcia, Senior Director of Policy at PCMA, met with Pharmaceutical topics to discuss the pharmaceutical supply chain and the growing problem of rising drug costs in more detail. He spoke about systemic deficiencies in the supply chain and how his organization is working to provide valuable care to all patients.

This interview is part of a larger, ongoing series on PBMs and their impact on independent pharmacies. Over the course of this series, we have examined how PBMs impact the pharmaceutical supply chain from the perspectives of legal experts, pharmacists, and various stakeholders.

Pharmaceutical topics: In your opinion, how would you explain the current state of the pharmaceutical supply chain in terms of drug prices?

Johnny Garcia: Drug pricing starts with the drug manufacturers, and often it's the PBMs that are blamed for the cost of drugs lately, but in reality it comes from the manufacturers. Our main job is to drive those costs down. On average, we use competition to negotiate about $148 billion in savings annually for manufacturers and pharmacies. If you look at the trends, specialty drug costs have increased significantly. From 2016 to 2021, it's increased about 43%, so about $301 billion just for specialty drugs; that doesn't include generics and brand names. That's about 50% of our total drug spend in 2021 alone. Last I read, it's about 3% of volume, which is 50% of drug spend. So that shows how expensive this specialty drug market is.

If you look a little further, the median launch price for a drug in 2008 was about $2,000, and in 2021 it's now about $180,000. We're seeing drug costs skyrocketing. That's obviously a big problem for the United States and for us as well. We're looking for ways to reduce that. When products come to market and go to a generic market, we try to take advantage of the generic market because those drugs are usually cheaper. Usually the average cost of [an] At American, the price of a generic drug is about $5.35 on the commercial market and about $3.09 on the Medicare market, so there's a lot of savings there. The branded market is a little more difficult. It's protected by some government policies, and we take advantage of branded competition wherever possible and try to get discounts and reduce the overall cost of these drugs.

READ MORE: Q&A: PBM legislation ‘most likely’ to pass this year

Pharmaceutical topics: When discussing the drug supply chain, there are many players involved in getting a drug from the manufacturer to the patient. Do you believe there are flaws in the current supply chain that could prevent patients from receiving valuable treatment?

Johnny Garcia: There are definitely deficiencies, and I think that's where PBMs are trying to figure out what those deficiencies are and how we can improve them. Some of the things we're looking at are side effects of medications. If a patient stops taking a medication, what was the reason for that? So we have some programs in place that try to find the root cause of that and see if there's anything we can do to make patients more comfortable with the medications. If it's a true side effect, is there a way to work with the provider and prescribe them a medication that might help them a little bit better? [take] take some of the fear out of patients; they may talk to friends and relatives who have taken medications with side effects that make them afraid to even start taking them. We have our adherence programs. We use [multiple] Languages ​​to help people with this too.

I think the biggest problem, and what we are experiencing to some extent right now, is simply the cost of drugs. Patients are having a hard time affording their drugs. And where do PBMs come in? We design drug lists and try to select drugs that have high safety and quality and that meet patient outcomes. But also [it’s] some costs included. If you can take a generic for the same price as a very expensive branded product, why not? It saves the patient money, it saves everyone money, and still provides the same benefits.

And then, [we’re] Promoting biosimilars in the specialty market. Some of the currently expensive drugs, the biosimilars that are coming out now, are big cost savers. The more biosimilars that come out and for certain drugs, the bigger our savings are. We're seeing that now with some blockbuster drugs as the biosimilars come out. I think we're also doing that by creating efficiencies by reducing the processing time of claims. There's no longer a need to do paper claims. That's something that's been around for about 40-50 years now that we have our online claims system. We're making sure the technology is in place to get that information out to providers through real-time benefit tools as well. When they prescribe these drugs to patients, they can see in real time what the cost is going to be to the patient. It's integrated into their electronic medical records. We are constantly looking for ways to streamline this to ensure patients have access to the medicines they need and receive this valuable care.

Pharmaceutical topics: What particular challenges has your organization faced in the recent past and what have you done or are you currently doing to overcome them?

Johnny Garcia: [We make] We make sure we are in some form of constant communication with providers to make sure patients are not getting lost in the crowd. We do this using the real-time performance tools I discussed earlier and make sure this is delivered through their electronic medical records. We are committed to expanding the generic and biosimilar market; the more competition the better for us.

As far as employers go, we need to make sure they have choice in how they design their pharmacy benefits and we're looking at different options and ways they can do that. We offer them multiple contract options, for example spread contracts, which are a controversial topic right now, but they allow employers to choose a plan with a set price. That gives them flexibility in budgeting and helps a lot of smaller employers to offer these pharmacy benefits. We also use rebates and negotiate the rebates on behalf of the employer. The employer can now decide what they want to do with those rebates. They can either have them passed on to them or offer to pay for some of the pharmacy benefits by keeping a portion of it. Often times they take those rebates and apply them to the premiums so overall the patient doesn't have to pay as much of their salary for their benefits.

We do [use] Pharmacy networks. We are experiencing many pharmacy deserts, such as [they’re] known in the industry. There is a huge shortage of pharmacists and other health professionals in the industry. How does that impact the ability of patients to get their medications in these rural areas? So we're constantly monitoring that and making sure we're working with different pharmacies to meet that need and make sure patients have access.

And we're really focused on allowing pharmacists to fully utilize their license. Different states do that differently. Some pharmacists are allowed to prescribe medications. Some are allowed to provide more counseling and clinical vaccinations and things like that. So where does it make sense for a pharmacist to fully utilize their license and solve some of these problems in rural areas? And then some of our members have also said that they've paid some rural pharmacies a little bit more money in the form of higher fees to keep them open because they're important and valuable to our networks.

Be sure to follow our ongoing coverage of the industry's pharmaceutical middlemen and the hostilities that surround them, from the perspective of legal experts, independent pharmacy owners and advocacy group leaders:

Stay tuned for more content from Drug Topics' conversation with Johnny Garcia, Senior Director of Policy at the PCMA, about common misconceptions about PBMs and the PCMA.

READ MORE: Q&A: Revealing the current state of PBMs’ role in independent pharmacies

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