Value-Based Care News

Employers Coalition Takes Up Drug Price Transparency, Price Caps

EmployersRx will lobby against PBMs and drug manufacturers over price transparency, fair business practices, rebates, and a drug price increase cap.

Employers, employer-sponsored insurance, price transparency, prescription drug spending, drug manufacturers, pharmacy benefit managers

Source: Thinkstock

By Kelsey Waddill

- When it comes to lowering skyrocketing drug prices, employers are making their voices heard on drug price transparency, drug price increase caps, and other price reducing strategies through the new coalition Employers' Prescription for Affordable Drugs (EmployersRx).

The coalition comprises health advocate groups including the Pacific Business Group on Health (PBGH), the ERISA Industry Committee (ERIC), and the National Alliance of Healthcare Purchaser Coalitions (National Alliance). Together, the organizations plan to advocate for lowering drug prices and promoting price transparency.

"As the largest collective purchaser of health care, businesses have a responsibility to employees and their families to tackle this important issue," said Elizabeth Mitchell, president and chief executive officer of PBGH. "Employers and patients are tired of bearing the brunt of high costs caused by a gamed system set up by drug manufacturers and pharmacy benefit managers. Employers are doing everything they can to contain costs, but this problem is too big to fix without action from the government."

To the coalition, drug manufacturers and middlemen like pharmacy benefit managers are the source of high drug costs. Thus, their four-pronged legislative approach to de-escalating drug prices focuses exclusively on those stakeholders.

First, EmployersRx calls upon drug manufacturers and PBMs to have greater transparency. The group says that these entities hide behind a convoluted and discrete pricing process to overcharge not only employers, but also patients, taxpayers, and the federal government.

To unravel drug pricing’s complexity, employers are seeking legislation that demands greater transparency surrounding drug price changes.

Payers should have access to pricing data, the employers argue. They state that PBMs should make drug prices publicly accessible so that the healthcare industry will be able to hold PBMs accountable. The Food and Drug Administration (FDA) should also release patent information on biologics in order to increase the development of lower cost biosimilars, the group says.

EmployersRx will pursue legislation that enforces fair business practices in the healthcare industry. Such legislation would end brand name drug manufacturers’ strategies, such as

  • “Pay for delay,” in which they pay generic drugs to delay releasing low cost similar treatments
  • “Evergreening” expensive drugs by lengthening their patents
  • Sending fake petitions to the FDA to delay generic drugs’ approval
  • Withholding of samples from generic and biosimilar drug companies to keep competition low
  • Generally gaming the FDA’s approval process to benefit brand name drugs and harm generic and biosimilar’s chances of approval in a fair and speedy manner

The coalition says they want to pay for the true value of a prescription drug. They object to PBMs’ practices of “spread pricing” or “price spreading” which CMS also condemned earlier this year.

EmployersRx also supports denying rebate profits to PBMs by mandating that the rebates pass directly to consumers. This would decrease the incentive for PBMs to create formularies based on potential profits, the employers argue.

Finally, prescription drug price increases, including launch values, should be capped, the coalition states.

With these convictions in mind, EmployersRx has already committed its support to the Lower Health Care Costs Act and The Preserve Access to Affordable Generics and Biosimilars Act.

The timing of the coalition’s formation, as 2019 draws to a close, is no coincidence. Rather, it is the culmination of employers’ growing healthcare-related anxieties and drug prices that are climbing with no end in sight.

A recent study by the National Business Group on Health indicated that 85 percent of employers listed pharmacy pricing as their primary concern and 39 percent of employers are basing their healthcare strategy around high cost claims. These claims often involve expensive drug therapies that swallow a significant portion of employers’ healthcare budget for employer sponsored health plans.

According to numerous studies, 2020 will likely bring no relief. Drug prices are projected to continue increasing from 2020 to 2027, rising by about 5.5 percent each year after 2023. As a result, employers have become much more proactive.

“Funds that could be used by companies to increase employee wages or reinvest in the company are instead being used to underwrite massive profits for drug makers,” the coalition said in a written statement. “EmployersRx is committed to driving the passage of legislation that supports competition, transparency, and value by empowering its members to be effective advocates through policy briefs, training and support.”