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Healthcare execs blame drug makers for high drug costs

By Clyde Hughes
Healthcare execs blame drug makers for high drug costs
Benefit managers told lawmakers it's the pharma companies that are responsible for high drug costs in the United States. File Photo by John Angelillo/UPI | License Photo

April 9 (UPI) -- Executives from some of the largest U.S. healthcare providers pointed a finger at pharmaceutical companies Tuesday, saying they're responsible for rising and high costs of drugs in the United States.

At a hearing before the Senate finance committee, executives from CVS Health, Cigna, Prime Therapeutics, Humana and OptumRx told lawmakers what they believe are the greatest factors. They said drug companies profiting off patients, such as the increasing cost of insulin, is a primary concern. 

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They also said rebates paid to pharmacy benefit managers, or PBMs, are not the cause.

"Pharmaceutical manufacturers insist that drug price increases are driven by rebates [to PBMs]," Derica Rice, executive vice president of CVS Health, said in prepared testimony. "This is simply not the case. If that was the case, rebates and list prices should be highly correlated.

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"To the contrary, data show that in many cases list prices are increasing faster for drugs with smaller rebates than for medications with substantial rebates."

Appearing in February before the same Senate committee, pharmaceutical executives from giants like Johnson & Johnson, Merck and Bristol-Myers Squibb, squarely put the blame of rising drug prices on the rebates.

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Optum Rx CEO John Prince told lawmakers Tuesday PBMs often negotiate with pharma companies to drive the cost down, and it's the drug makers who set the prices.

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"Drug manufacturers have continued to increase the prices of their branded drugs," he said. "List prices have increased on the 20 most-prescribed brand drugs for seniors by an average of 12 percent each of the past five years.

"Drug manufacturers alone decide what list price to set for their branded products. If market conditions permit Optum Rx to negotiate better prices for a particular branded product, then we do so."

Humana executive William Fleming echoed the claim.

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"A major factor contributing to the increase in drug spending is the list price of prescription drugs," he said. "Drug manufacturers raise list prices to boost their revenue."

Lawmakers have made repeated efforts in recent months to nail down the cause of high drug prices, and it's also been a stated priority of President Donald Trump's. Some in Congress have described the rebate processes as secret, backroom deals that bear much of the blame.

"We're all about getting the best possible price for patients,'" Sen. Ron Wyden said. "Bottom line, PBMs are middlemen who strike deals with drugmakers in secret. In my experience, that kind of negotiation rarely results in an act of charity for consumers."

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