By Adam Kautzner, President of Care Management and Express Scripts at Evernorth
This month, President Donald Trump revived a drug pricing policy from his first term, advocating for a Most Favored Nation (MFN) prescription drug pricing policy. The president’s proposal takes a two-step approach: publicly pressuring manufacturers to voluntarily bring list prices in line with those charged overseas and threatening regulatory action to link U.S. drug prices to those in comparable developed countries if manufacturers do not comply with voluntarily lowering prices. We strongly support pharmaceutical companies lowering their list prices, especially in the United States, and welcome the administration’s actions to hold them accountable.
However, pharmacy benefit managers (PBMs) also play a critical role in ensuring patients can access, afford, and benefit from these medications. A reflection of the role played by PBMs is that 93% of prescriptions in the U.S. have final out-of-pocket costs below $20. Still, 1% of prescriptions have final out-of-pocket costs over $125 – that is the problem policymakers should be aiming to solve.
Pharma list prices are too high
For decades, pharmaceutical companies have raised the prices of medicines, impacting patients, employers, and health plans alike. This year alone, drugmakers have increased U.S. prices on at least 250 branded medications, including cancer therapies and vaccines. Launch prices for new medicines have also increased steadily. In 2023, the median annual list price for a new drug reached $300,000, up from $222,000 the previous year.
We agree that pharmaceutical prices in the U.S. need to be reduced, and PBMs work tirelessly to achieve this goal every day.
PBMs advocate for millions of Americans, working to make medications available at the lowest possible out-of-pocket costs while also investing in clinical safety and overall health care affordability. Economist Dennis Carlton found that while operating with small margins PBMs facilitate prescription drug cost savings for plan sponsors and their members. By pooling negotiating power across employers, unions, and government entities, PBMs secure larger discounts from drug manufacturers and pharmacies than individual plan sponsors could achieve. Annually, PBMs provide $145 billion in value to the U.S. health care system by lowering prescription drug costs.
Additionally, PBMs improve health outcomes for patients and offer employers and other health insurance plan sponsors the choices and guidance needed to expand access and provide quality prescription drug coverage. According to research from Visante, PBMs will help prevent 1 billion medication errors from 2020 through 2030. The same study found that PBMs improve drug therapy and patient adherence in diabetes patients, helping to reduce complications of 500,000 emergency department visits, 440,000 heart attacks, 330,000 strokes, 150,000 amputations, and 60,000 incidents of end-stage kidney disease annually.
Improving access and affordability in partnership with benefits
PBMs and plan sponsors play a crucial role in reducing the cost of medicines for patients at the pharmacy counter. Today, the average cost of a branded drug is over $1,000 per month and plan sponsors bear more than 90% of that cost. Lowering pharmaceutical prices can reduce these costs for plan sponsors and patients while ensuring appropriate use and improved health outcomes. While cash discount programs like InsideRx can help American consumers access lower prices for a narrow subset of drugs, these models more often result in higher out-of-pocket costs compared to their insurance benefits.
By PBMs and plan sponsors working together to strengthen our current system, we can enhance the value provided to patients, ensuring they receive the latest pharmacological innovations with clinical oversight. This includes developing benefit structures that introduce direct-to-consumer (DTC) pricing through the plan benefit, ensuring members receive appropriate clinical care and support while reducing costs for both the member and the plan sponsor.
Another example of this enhanced value is the way that PBMs have ensured appropriate patients have access to expensive GLP-1 therapies and support them through tough side effects, helping them achieve optimal doses and maintain weight loss with clinical lifestyle modification programs. Ensuring better outcomes, backed by data and expertise, is one of the main reasons plan sponsors rely on PBMs to administer their benefit.
Driving lower prices from pharma for Americans
PBMs are best positioned to drive lower prices from pharmaceutical companies for Americans and those who provide their benefits. The savings negotiated by PBMs often exceed the rates achieved through government programs like Medicare’s Drug Price Negotiation Program. For example, Express Scripts members paid less than 10% of the list price for lifesaving blood thinners like Eliquis and Xarelto – notably less per prescription than the 33% of the list price negotiated by Medicare.
This is possible because PBMs continuously work to negotiate lower net prices for prescription drugs, driving competition to lower costs for members and plan sponsors. On average, Express Scripts’ members with employer-sponsored drug coverage paid $15.10 out of pocket for a 30-day prescription in 2023.
Additionally, Express Scripts has made significant commitments to lower prescription drug costs and improve patient outcomes, including changes designed to protect patients from high list prices set by manufacturers. These initiatives provide additional optionality to plan sponsors and can help ensure that patients do not pay more than the net cost to the plan sponsor for a drug.
These efforts demonstrate our dedication to making drug prices more transparent and affordable for all Americans. We look forward to continuing to work with policymakers to address the high cost of prescription drugs and ensure Americans can receive the medications they need at prices they can afford, ultimately putting patients first.
