PhRMA and FTC submissions to HHS on blueprint to lower drug prices

In response to a Health and Human Services Department request, trade group Pharmaceutical Research and Manufacturers of America (PhRMA) has announced a new policy position on how payments should work in the supply chain.

The industry is advocating for reforms that prevent pharmacy benefit managers (PBMs) and other entities in the supply chain from having their compensation calculated as a percent of the list price of a medicine and instead a fee based on the value their services provide.

Over time, how we pay for medicines in the USA has evolved into a complex system of list prices and rebates that move through an opaque supply chain. A medicine’s rebate – rather than its actual price – often determines if it is covered or where it sits on a formulary. This creates an unfair system in which patients are often paying higher list prices regardless of the discount their insurer receives. Reforms to prevent PBMs and others in the supply chain from being paid off the list price of a medicine can fix broken incentives and make the system work better for patients.