Q&A: PCMA on Drug Pricing and the Pharmaceutical Supply Chain

September 19, 2024

News

Article

Johnny Garcia, Senior Director of Policy at the Pharmaceutical Care Management Association, discussed ongoing issues within the pharmaceutical supply chain and his organization’s role within it.

The Pharmaceutical Care Management Association (PCMA) is the national organization that represents pharmacy benefit managers (PBMs) in the US. While PBMs often work as middlemen between drug manufacturers, insurers, pharmacies, and patients, the PCMA lends them a helping hand with resources and tools to further assist the entities that PBMs work with.

In the most recent episode of Over the Counter, Johnny Garcia, Senior Director of Policy at the PCMA, sat down with Drug Topics to discuss the pharmaceutical supply chain in greater depth and the growing issue of rising drug costs. He talked about systemic flaws within the supply chain and how his organization is working to provide valued care to all patients.

This interview is part of a larger ongoing series covering PBMs and how they impact independent pharmacies. Throughout this series, we have explored how PBMs affect the pharmaceutical supply chain from the perspective of legal experts, pharmacists, and various advocacy groups.

Stay tuned for more content from Drug Topics’ conversation with Johnny Garcia. | image credit: Johnny Garcia

Drug Topics: From your perspective, how would you explain the current state of the drug supply chain as far as drug pricing goes?

Johnny Garcia: Drug pricing starts with the drug manufacturers and often times PBMs are the ones that, lately, have been blamed for the cost of drugs, but it really comes from the manufacturers. Our primary mission is to lower those costs. On average, we leverage competition to negotiate somewhere around $148 billion in savings for manufacturers and pharmacies annually. Specialty drugs, if you look at the trends, they've gone up significantly. From 2016 to 2021, they increased by about 43%, so it's somewhere around $301 billion just for specialty drugs; that doesn't include generic and brand name. That accounts for about 50% of our total drug spending just in 2021. Last I had read, it was about 3% of the volume equals 50% of drug spend. So, it goes to show how expensive that specialty drug market is.

If you look a little bit further, the median launch price for a drug in 2008 was about $2000, and in 2021, it's now around $180,000. We're seeing drug costs skyrocket. It's obviously a large issue for the United States and us as well. We look for ways to reduce that. When products come to market and they go to a generic market, we do try to utilize the generic drug market because those drugs are typically cheaper. Typically, the average cost for [an] American is about $5.35 for a generic drug in the commercial market and about $3.09 in the Medicare market. So, there's a lot of savings there. The brand name market is a little bit more difficult. It's protected by some government protections and we leverage competition between brand name products where possible, and try to drive into rebates and reduce the overall cost on those drugs.

Drug Topics: When discussing the drug supply chain, a lot of entities are at play to deliver a medication from the manufacturer to the patient. Do you believe that there are flaws within the current supply chain that may deter patients from receiving valued care?

Johnny Garcia: There's definitely flaws, and I think that's where PBMs are trying to understand what those flaws are and how we can improve that. Some of the things that we look at are side effects to medications. If a patient stops taking a medication, what was the reason for them stopping that medication? So, we have some programs in place that try to get to the root cause of that and see if there's anything we can do to help the patients feel more comfortable with the medications. If it's a true side effect, is there a way that we can partner with the provider and get them onto a medication that maybe would help them a little bit better? Helping [take] away some of the fear from the patients; they may be talking to friends and family that have taken medications that experience side effects, so they're afraid to even start them completely. We do have our adherence programs. We use [multiple] languages to help people with that as well.

I think the largest thing, and partly what we're experiencing right now, is just the cost of medications. Patients are having a hard time affording their medications. And so where do PBMs come into play for that? We do things like designing formularies, trying to pick drugs that have high safety and quality and will meet the patient's outcomes. But as well, [it’s] containing some costs. If you can take a generic product for the same price as a very expensive brand name product, why not? It saves the patient money, it saves everybody money, and it still gets the same benefits.

And then, [we’re] promoting biosimilars in the specialty market. Some of the high-cost medications that are out there right now, the biosimilars that are now hitting the market, are major cost savers. The more biosimilars that hit the market and for specific drugs, the better our savings are. We're seeing that with some blockbuster drugs now as the biosimilars are hitting that market. I think the other ways that we do that is we provide efficiency through shorter claims processing time. There's no longer a need to do paper claims. That's something that's been out for about 40–50 years now, now that we have our online claim system. Making sure that the technology is there in providing that information through real-time benefit tools as well to the providers. As they're prescribing these medications to patients, they can see what the cost will be for the patient in real time. It's integrated into their electronic medical records. We're constantly looking for ways to streamline that to make sure the patients have the access to the medications that they need and get that valued care.

Drug Topics: What specific challenges has your organization faced in the recent past and what have you done, or what are you doing, to address those?

Johnny Garcia: [We make] sure that we're in constant communication with the providers in some form to make sure that the patients don't just get lost in the mix. We do that through the real-time benefit tools that I explained earlier, making sure it's provided through their electronic medical records. We advocate for increasing the generic and biosimilar market; the more competition, the better for us.

In terms of employers, we need to make sure that employers have choices as they're designing their pharmacy benefits and we look at different opportunities and ways for them to do that. We have multiple contract options for them, things like spread contract, which is a controversial issue right now, but that allows an employer to select a plan that's a set price. It allows them the flexibility for budgeting and it helps a lot of the smaller employers provide that pharmacy benefit. We use rebates as well and we negotiate the rebates on behalf of the employer. Now, the employer gets to decide what they want to do with those rebates. They can either have them pass back through to them. They can offer to pay some of the pharmacy services by keeping a portion of it. Often times, they take them and apply them to the premiums so the patient doesn't have to pay as much out of their paycheck for their benefits overall.

We do [use] pharmacy networks as well. We’re experiencing a lot of the pharmacy deserts, as [they’re] known in the industry. There's a large shortage of pharmacists and other health care professionals in the industry. How does that impact the ability for a patient to get their medications in these rural areas? So, we're constantly monitoring those and making sure that we're partnering with different pharmacies to fill those needs to make sure that the patients have access.

And we're really focused on trying to allow pharmacists to practice at the top of their license. So different states address this in different ways. Some pharmacists can act as a prescriber. Some can offer more counseling and clinical immunizations, things like that. So where does it make sense for a pharmacist to practice at their top of the license and provide and fill in some of those, those rural-area issues? And then, some of our members have also expressed that they paid some of the rural pharmacies a little bit more money in higher rates to keep them open because they are important and valuable to our networks.

From the perspective of legal experts, independent pharmacy owners, and leaders of advocacy groups, be sure to catch up on our ongoing coverage of the industry’s pharmaceutical middlemen and the animosity that surrounds them:

Also, stay tuned for more content from Drug Topics’ conversation with Johnny Garcia, Senior Director of Policy at the PCMA, regarding common misconceptions about PBMs and the PCMA.

Ready to impress your pharmacy colleagues with the latest drug information, industry trends, and patient care tips? Sign up today for our free Drug Topics newsletter.