PBMs making big bucks off specialty drugs

Tue, 22 Apr 2008 06:59:54 -0400

Drugmakers aren't the only ones making money off the specialty drug trend. Specialty drugs, many of which are biologics, are used to treat a range of rare or difficult diseases, including various cancers, MS, rheumatoid arthritis, anemia and hepatitis. And pharmacy benefit managers (PBMs), which distribute these drugs to patients, are realizing a growing profit from high-priced products.

Take the case of Questcor's H.P. Athcar Gel. Last year patients and payors were shocked when the price of Questocor's epilepsy treatment increased from $1,600 a vial to $23,000. The decision was made after Questcor did market research and determined that its drug would sell at the higher price (incidentally, Questcor landed in the number one spot of FiercePharma's best stocks of 2007 list). To curb costs, pharmacy benefits managers are designed to enforce rules on drug selection, usage, and dosage. But as the New York Times observes, this specialty drug trend is "seemingly at odds with that best-price mission." The paper notes paper that Express Scripts, CVS Caremark and Medco Health Solutions have been making increasingly large profits off the specialty drugs they sell, particularly when they sign contract to be exclusive or semi-exclusive distributors of rare drugs.

"We are headed right down into conflict alley with these exclusive arrangements," Gerry Purcell, an Atlanta-based health benefits consultant, told the Times. The exclusive licensing agreements between drugmakers and distributors mean PBMs "can raise the prices at will, and the employer will have little chance but to pay the bill."

- read the story in the New York Times