Insurers fight back on drug prices

[Bob Of Burleson]

Health Insurers Pressing Down on Drug Prices

By ANDREW POLLACK
The New York Times

In dealing with health plans, drug companies are facing a new imperative — bargain or be banned.

Determined to slow the rapid rise in drug prices, more health plans are refusing to cover certain drugs unless the companies charge less for them.

The strategy appears to be getting pharmaceutical makers to compete on price. Some big-selling products, like the respiratory medicine Advair and the diabetes drug Victoza, have suffered precipitous declines in market share because Express Scripts, the biggest pharmacy benefits manager, recently stopped paying for them for many patients.

“There’s clearly more price competition in the marketplace,” Andrew Witty, chief executive of GlaxoSmithKline, said, talking about Advair in a recent company earnings call.

Executives of pharmacy benefit management firms say they must do something to cope with rising prices, particularly for so-called specialty pharmaceuticals, which are used to treat complex diseases like cancer and multiple sclerosis.

Spending on specialty drugs rose 14.1 percent last year and by even greater amounts in previous recent years, according to Express Scripts. Most of that increased spending comes not from new drugs or new patients, but from price increases on older drugs that can often exceed 10 percent year after year.

Many other countries control drug prices in some manner, so drug companies have become dependent on increasing prices in the United States to grow.

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[ann jusko]

My husband takes a brand name drug. When I went to pick it up, it was $190. Previously, our share was $37. We were perplexed, but he needs it. The cause? The name brand apparently now has a generic equivalent. Our insurance has a policy of "If a drug has a generic, the generic has to be used." Well, it's new so it's not on their formulary.