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    Six ways to combat pharma price gouging


    Back in September, Turing Pharmaceuticals set off a firestorm of criticism for pricing Daraprim, an older drug, at $750 per pill. 

    After the backlash, Turing has slashed the cost of the 62-year-old drug. This controversy has brought price gouging to the forefront for payers, says Alynn M. Purdum, PharmD, director of pharmacy, SummaCare, Inc.


    “In past years, if a novel drug came to market it was used for rare conditions,” says Purdum.  “Health plans—payers—expected to pay a great deal of money for the drug, but may have only had one plan member with that particular uncommon condition. However, with the surge of new hepatitis C drugs, health plans were disappointed to see extraordinarily high per- member-per-month costs for this type of medication that has such widespread use.”

    Combatting these egregious price increases can be a challenge for payers, but industry watchers offer six top-secret weapons that will help:

    #1. Pharmacy benefit managers (PBMs). “PBMs contract with drug makers to be the exclusive therapy on the formulary—such as when Express Scripts made Gilead’s Sovaldi compete with AbbVie to be the exclusive drug for hepatitis,” says Devon Herrick, senior fellow, National Center for Policy Analysis. 

    “PBMs also like to create preferred pharmacy networks,” Herrick says. “They can negotiate lower prices if they can build pharmacy networks excluding certain pharmacies from the networks that are known to drive higher costs for customers and members.”


    Herrick has witnessed large PBMs refusing to do business with so called “captured pharmacies,”—“those dispensing the drugs of only select drug makers and who are basically paid to never substitute a generic even though one is available,” he explains. “Medicare Part D plans are mostly insulated from the cost-sharing discount debit cards drug makers give to patients to encourage the use of brand drugs,” Herrick says. “It’s considered an illegal kickback in Medicare. However, PBMs must deal with that in their employer plans. One method is to encourage the use of mail-order pharmacies for lower cost sharing.”

    #2.  Utilization management. The days of encouraging members to switch from one costly blood pressure medication, to another to save money, for example, are over, according to Purdum. 

    “Specialty pharmaceuticals cover a niche membership market and there are no less costly medication alternatives,” she says. “Therefore, plans must seek out the best ways to manage members. For example, hepatitis C treatment may be given for an eight- to 24-week treatment regimen at approximately $33,000 per month. Certain variations in this disease support when eight weeks of therapy may be appropriate.”

    Strict utilization management controls are needed to ensure members who qualify for the eight-week regimen receive it and are not taking for 24 weeks, says Purdum.

    Next: Four more ways to control pharma costs

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    • hcvmeds
      I think the article did a good job trying to explain to the public and health care personnel the intricacies of drug pricing and challenges. I have met many people over my lifetime going across the border from San Diego to Tijuana to get their meds. A long time and as far as I know they have not had any issues. I understand there are unscrupulous pharmacists just looking for a buck, in my personal experience there have been none. In regards to generic Sovaldi and generic Harvoni licensed by Gilead Sciences to Indian pharmaceutical companies is creating a huge boom for hepatitis c meds tourism. I would like to know what Modern Medicine Network's thoughts on hcv patients traveling for life saving medicine. Is it the right thing to do or not? Please advise.

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