CVS
manufacturers prompt those manufacturers to increase list prices. In those documents and a letter to all Ohio lawmakers, the company also has said it is returning all but 2 percent of the rebates it is collecting back to the health plans it represents.
But upon examination, those claims are more than a little slippery.
CVS faced heat throughout 2018 after
revelations that its pharmacy middleman business billed taxpayers far more for Medicaid drugs than it paid to the pharmacies that dispensed them, charging three to six times the standard rate. Critics said that a lack of transparency was at the heart of problems with a system that CVS and other pharmacy benefit managers said was saving taxpayers hundreds of millions of dollars.
The same lack of transparency clouds CVS’S statements about rebates.
“There is ample evidence via independent
studies showing that drug-makers set and raise prices unrelated to the rebates PBMS secure on behalf of their clients,” CVS Chief Communications Officer Kathryn Metcalfe wrote in a letter to the editor.
Asked to support this claim, CVS provided two pieces of what it said was independent research. However, both were done by Visante, a consulting firm founded by a former executive of Expressscripts, another of the big three PBMS, and one was for the Pharmaceutical Care Management Association, an industry-funded group.
Asked who paid for the work and whether it had been peer-reviewed, CVS spokesman Michael Deangelis punted. He said, “PCMA would be the proper source for additional information about the Visante study,” he said.
In other words, CVS doesn’t know who paid for the research it says proves that rebates don’t force up drug prices, and it doesn’t know whether the research has been through a process intended to ensure that it is scientifically sound.
The industry group, the Pharmaceutical Care Management Association, sent out a statement that also
didn’t address who paid for the research or whether it had been subject to peer review.
“Commissioned research and analyses by Visante rely on creditable, verifiable sources, such as the Centers for Medicare and Medicaid Services, the U.S. Department of Health and Human Services Office of Inspector General, and the Government Accountability Office, as well as industrystandard data from reputable private firms. These sources are properly attributed in the analyses, and we welcome any inspection as to their veracity,” it said.
An academic whose research has withstood the rigors of peer review said there is no such work regarding the impact of rebates on the price of prescription drugs — and for good reason.
“I can’t point to a study where I can say, ‘Look for this set of drugs. We saw an increase in rebates and look, these drugs, their price went up.’ That study isn’t there because rebates are confidential or private information, so I as a professor don’t have access to data on the drug level on what rebates are there,” said Neeraj Sood, director of research at the University of Southern California’s Schaeffer Center for Health Policy and Economics.
Asked about CVS officials’ statements to the contrary, Sood said, “to me it seems very plausible that if you’re a pharmaceutical company and you see a PBM demanding a higher rebate, you respond by just raising your list price.”
It doesn’t address rebates, but Deangelis also pointed to a graph on the website Healthaffairs. org showing that in 2016, manufacturers retained $323 billion of overall drug spending, while PBMS retained $23 billion. The point, presumably, is that manufacturers are getting a lot more of every drug dollar than are pharmacy benefit managers.
As it happens, Sood has conducted research that came to a similar conclusion. The question, though, is how much more the entity that risks money developing and making a drug deserves to make compared with the middlemen in the supply chain.
“You and I ask, ‘Is (the amount PBMS are getting) a reasonable number, or should PBMS be making less than that?’ My research didn’t address that question,” Sood said, but he added that he is working on a study to try to find an answer.
In addition, Metcalfe’s letter, a corporate news release and letters to all 130 Ohio lawmakers said CVS Caremark passes back to its clients 98 percent of all drug rebates.
But the lack of transparency is once again a factor.
Rebates are protected from disclosure as trade secrets. Critics also have said that PBMS have made creative use of the word “rebate” to further obscure the amount they’re collecting from manufacturers.
Asked whether the CVS statement referred to all refunds, fees and other money from manufacturers, Deangelis didn’t answer directly.
“Rebates are discounts off the list prices we negotiate with manufacturers on behalf of our clients,” he said.
Deangelis said CVS’S 2 percent share of regular rebates amounts to $300 million a year, which means rebates would total $15 billion.
Antonio Ciaccia of the Ohio Pharmacists Association said he doesn’t buy those numbers.
“I can say pretty definitively that that’s an absurd number,” he said. “It all comes back to what are we calling a rebate?”