Oct 8, 2019

Medicaid programs willing to boot out drug pricing middlemen

Pharmacy benefits are changing in many state Medicaid programs. Photo: Scott Olson/Getty Images

Michigan's Medicaid program is proposing to fire the pharmacy benefit managers that handle its prescription drug claims and negotiate prices. The state would manage drug coverage itself, starting Dec. 1.

The big picture: More state Medicaid agencies have determined that outsourcing all negotiations and operations of prescription drugs to PBMs has not produced the dramatic savings they were promised.

Details: Michigan officials said in a bulletin the state could extract bigger rebates from pharmaceutical companies and cut administrative costs if the state handled all Medicaid medication benefits, instead of the current private contractors.

  • Michigan would use Magellan as its sole drug claims processor.
  • A spokesperson for the Michigan Department of Health and Human Services said the proposal would save $40 million, and officials "will be reviewing the feedback carefully to determine next steps."
  • CVS Health, OptumRx, MedImpact and a handful of other PBMs stand to lose business.

Between the lines: State governments, along with pharmacists, continue to lead the crusades against PBMs.

  • A recently signed California regulation will shift all Medicaid drug benefits away from PBMs by 2021, and West Virginia's Medicaid department fired its PBMs in 2017.

Go deeper

Drug rebate dollars continue to rise

Photo: Julia Rendleman/Getty Images for Eventive Marketing

If Express Scripts is any kind of bellwether for drug rebates — pricing discounts that drug manufacturers pay to pharmacy benefit managers so their drugs get put on the drug coverage lists — then those dollars continue to rise.

By the numbers: Cigna, which bought Express Scripts last year, said it is owed almost $4 billion in rebates from pharmaceutical companies as of Sept. 30, according to new investor documents. That's up almost $600 million since the start of this year.

Go deeperArrowNov 1, 2019

New drugs are launching with ever-higher prices

Illustration: Eniola Odetunde/Axios

The average launch prices for new brand-name drugs have skyrocketed over the past decade, according to an analysis from drug research firm 46brooklyn.

Why it matters: The U.S. prescription drug market increasingly has thrived on high initial price tags and subsequent increases. That has resulted in higher premiums and out-of-pocket costs for new drugs, as well as more expensive generics.

Go deeperArrowOct 16, 2019

Pete Buttigieg joins 2020 Democrats' leftward march on drug prices

Mayor Pete Buttigieg. Scott Olson/Getty Images

Pete Buttigieg released Tuesday his plan to reduce prescription drug prices, which includes many of the liberal proposals that have become the new Democratic normal.

Between the lines: This plan puts Buttigieg somewhere in the leftward middle of the top-tier candidates on drug prices. The field — and the party as a whole — is much more aggressive on the subject than Democrats have been in the past.

Go deeperArrowOct 8, 2019