Today, it’s rough for Oregon employers who want to do the right thing and cover employees’ necessary medications. Specialty drugs — those that must be dispensed by specialty pharmacies with close patient monitoring — have become a source of astronomical costs. Though only 3% of all U.S. medications fall into the specialty category, they account for 50% of all money spent on drugs.
Their shockingly high costs can bankrupt employers with prices in the thousands or tens of thousands for monthly doses. This skyrockets insurance prices and can be impossible for small-midsize employers to absorb. But specialty drugs are only expensive due to behind-the-scenes manipulation by pharmacy benefit managers (PBMs), and it’s time for our state and federal representatives to rein in PBMs’ deceptive activities.
Take Humira for example, which is used to treat rheumatoid arthritis. Data from 2020 shows that Humira sells for about $5,000 per dose in Oregon, typically administered weekly, and it was one of the top drugs for overall sales in the state that year. As with all specialty drugs, it can only be dispensed by a specialty pharmacy as it requires additional patient monitoring and insurance approvals
But can you really say that a drug is “specialty” medication if it’s one of the most widely prescribed in our state and our country’s #1 source of drug spending? Humira has the scale to deliver lower prices and remain highly profitable. So why is it so expensive for Oregon employers and patients?
The answer lies in how PBMs categorize and influence pricing. PBMs are middlemen that negotiate and manage insurers’ drug benefits including what medications are covered and whether a medication is considered generic, brand or specialty. They have complete leeway over what employers are charged for drug coverage and what patients are charged for a treatment. They can classify drugs however they desire.
Once PBMs designate a medication as specialty, the opportunity for profit is much higher. As one report put it, this practice “provides a galaxy of opportunities for hidden mark-ups and manipulating drug prices.” Through employers’ insurance, PBMs can charge substantially more for a medication when it’s reclassified as specialty, to the tune of hundreds or thousands of dollars extra. Sometimes, a PBM will negotiate a high rebate for a specialty drug, intended to reduce costs, and then keep the bulk of the rebate while unfairly charging employers’ insurance more — driving up what patients pay for coverage.
Because these medications can only be dispensed by specialty pharmacies, of which there’s only a few in Oregon, PBMs can also dictate where patients purchase and pick up medications. Frequently those specialty pharmacies are owned by the PBM, further increasing their profits.
Humira is just one example of an everyday medication being deemed “specialty” and garnering a much higher cost as result. There are dozens of specialty medications for life-threatening diseases like leukemia and multiple myeloma that must be taken frequently to keep patients healthy.
When a drug is designated specialty, employers’ costs for prescription coverage can go from thousands of dollars to hundreds of thousands overnight and drastically escalate what Oregon patients must pay for prescription medications.
Oregon employers shouldn’t have to go bankrupt covering crucial, life-saving medications due to deceptive PBM practices. Oregon patients also can’t sustain additional costs as they’ve already experienced 49% increase in healthcare expenses over the last six years.
We can have excellent prescription drug coverage and affordable prices for both employers and patients if we regulate PBMs. It’s time for our state and federal legislators to take a closer look at PBMs and make medications more accessible for all Oregonians.
Mike Millard is a professor of pharmacy at Pacific University and was the 2021 Oregon State Pharmacy Association Pharmacist of the Year.
The pharmaceutical industry, which now regulates the Food and Drug Administration, will continue to find ways to make obscene profits at the expense of patients. Perhaps we should start by forbidding the industry from lobbying and have the public sector take back control over health care. We might start by forbidding conflicts of interest in CCO boards.
We need Improved Medicare for All. Pay for health care the way we pay for public schools and libraries -- progressive taxation with no deductibles, no co-pays and no payment at the point of service. (See Oregon SB 1089: Universal Care Governance Board. And federal HR 3421: The Medicare for All Act of 2023.)