Thursday, March 10, 2016

The Dark Art of Prescription Drug Pricing

Have you wondered how prescription drug prices are set? I attended a pharmacy seminar with Mike Zucarelli, a pharmacist and the National Pharmacy Practice Leader for CBIZ, to learn more this morning. Mike shared the chart in this image that illustrates how the money flows between drug manufactures, pharmacy benefit management companies, employers as plan sponsors and us as consumers or beneficiaries. No wonder I'm confused!

The incentives are crazy and unknown to most of us. Drug manufactures pushing off-label drug use -- doctor's prescribing medications for uses that have not been approved or proven to work. Insurance companies providing incentives for doctors to prescribe certain classes of drugs. Pharmacy benefit management companies negotiating rebates (aka kick backs) from drug manufactures not just based of the volume they purchase, but to take a competitors drug off the formulary. 

Folks at CBIZ referred to pharmacy benefit management (PBM) pricing as a dark art. If that's the case, Mike may be Harry Potter. Our relationship with CBIZ is new. Zack Pace is now ASHA's broker and he's put together a great team for us that includes Mike. We definitely need someone with his expertise to help us get the right drugs to the right people at the right time for a fair price. 

Mike recommended this John Oliver video on Marketing to Doctors. Watch it and you'll have a better sense of the warped incentives in prescription drug dispensing and pricing. I promise you'll be entertained -- probably horrified too. And, check out to see the payments your doctors received from pharmacy companies.    

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