Paranicas: Study shows middlemen (not pharma companies) are cause of surging prescription prices

A recent study that just over half of the money spent on prescription drugs goes to pharmacy benefit managers, hospitals, health insurers, the government and others is not sitting well with Dean Paranicas.

Paranicas, the longtime and well-respected CEO of the HealthCare Institute of New Jersey — a trade association that serves as the voice for the state’s research-based biopharmaceutical and medical technology companies — said the report from the Berkeley Research Group illustrates the biggest problem in the sector.

“This study confirms that what patients pay for their medicines is not being determined by the companies that discover and manufacture those drugs,” he said.

The report shows that, between 2018-20, the portion of the amount of money spent on brand drugs that actually is retained by the innovative biopharmaceutical companies, which spend billions to research, discover, develop and produce brand medicines, declined to 49.5%.

“While U.S. biopharmaceutical companies continue their time-consuming, risky and expensive pursuit of medical innovation, resulting in advances against COVID-19, Hepatitis C, cervical cancer, HIV/AIDS and other dreaded diseases, PBMs, hospitals and other actors within the supply chain — not patients — continue to benefit significantly from the substantial discounts offered by drug companies, as particularly evidenced by the dramatic growth in 340B program discounts,” Paranicas said.

Even worse, Paranicas said, the supposed discounts are going to the wrong people.

“Brand-drug companies offer over $180 billion in discounts annually,” he said. “If these discounts were shared with patients, as the manufacturers intend, they would provide significant and immediate relief to patients.”

Paranicas said the pricing issue goes back to who is doing the pricing.

“As we’ve long said, in a structure where drug manufacturers do not sell to patients, do not set the price at the pharmacy counter and do not set patient out-of-pocket costs, and a drug’s list price — instead of the discounted price — is used to determine a patient’s copay and deductible, we need to look at the whole picture, including the complex marketplace and supply chain, when seeking ways to lower costs for patients,” he said.

“We will continue working with New Jersey’s congressional delegation, members of our state government and other key stakeholders to ensure the middlemen in the supply chain apply the substantial discounts to bring immediate relief to patients.”