CVS CEO defends pharmacy middlemen, accuses drugmakers of ‘monopolistic’ practices

CVS Well being CEO David Joyner on Wednesday defended controversial pharmacy middlemen like his firm’s Caremark unit, that are broadly accused of inflating prescription treatment costs, and as an alternative accused producers of “monopolistic tendencies” that hold drug prices excessive within the U.S. 

Joyner, who stepped into the function in October, spent a lot of his opening remarks on the corporate’s fourth-quarter earnings name discussing so-called pharmacy profit managers, or PBMs. It was atypical for CVS’ quarterly name to start that means, however comes at a time when lawmakers on either side of the aisle and President Donald Trump have signaled curiosity in cracking down on PBMs. 

CVS owns Caremark, one of the nation’s three largest PBMs that collectively administer roughly 80% of prescriptions within the U.S.

These middlemen negotiate rebates with drug producers on behalf of insurers, create lists of drugs often known as formularies which might be lined by insurance coverage and reimburse pharmacies for prescriptions. However lawmakers and drugmakers alike argue that PBMs overcharge the plans they negotiate rebates for, underpay pharmacies and fail to cross on financial savings from these reductions to sufferers.

Joyner acknowledged that rising health-care prices within the U.S. are pressuring sufferers, employers and the federal authorities. He blamed components equivalent to elevated affected person utilization of providers, rising health-care supplier prices, labor shortages and “dramatic value hikes” for branded medicine. 

However he mentioned PBMs like Caremark are “one of probably the most highly effective forces serving to to offset rising well being care prices,” claiming that they’re the one half of the drug provide chain solely centered on decreasing prices. 

“Our work is a crucial counterbalance to the monopolistic tendencies of drug producers,” Joyner mentioned. “This is the reason PBMs are wanted and why producers battle so onerous to restrict our capabilities.” 

He alleged that branded producers added $21 billion in annual gross drug spending within the first three weeks of January via their value hikes, however didn’t cite the place the determine is from. 

Joyner added that a number of economists have estimated that PBMs generate web worth for the U.S. health-care system, greater than $100 billion a yr.

“Nobody has demonstrated extra success than the PBMs of driving down drug costs,” he mentioned.

Nonetheless, the pharmaceutical business and lawmakers argue that PBMs and insurers pocket these financial savings from negotiated rebates and reductions relatively than passing them to sufferers.

In an announcement on Wednesday, PhRMA, the nation’s largest lobbying group for the pharmaceutical business mentioned PBMs are “beneath intense, well-deserved scrutiny.” 

“Bipartisan state attorneys common, policymakers in each Congress and state legislatures and the FTC are all investigating these well being care conglomerates,” a PhRMA spokesperson mentioned. “They’ve all come to the identical conclusion: PBMs are driving up prices and lowering entry on the expense of sufferers, employers, and our well being care system.”