Gilead Exec Points to Pharmacy Benefit Managers' Role in Drug Pricing

Mar 07, 2017

Bloomberg News

A Gilead executive says the drugmaker can’t cut product pricing because middlemen who manage drug benefits -- Pharmacy Benefit Managers -- would refuse to cover it.

While PBMs' role is to negotiate lower prices for customers, drugmakers have begun aggressively implicating these middlemen, such as Express Scripts and CVS Health, in the drug pricing debate. PBMs often take a cut of manufacturing rebates (about 10 percent) for themselves before passing the rest of the savings to the insurers. According to pharmaceutical companies, PBMs prefer higher list prices because the middlemen want to boost their own revenues.

“If we just lowered the cost of Sovaldi from $85,000 to $50,000, every payer would rip up our contract," Jim Meyers, executive vice president of worldwide commercial operations, Gilead, told Bloomberg News. “We have a system that’s incentivized upon rebate revenue.”

Read the Bloomberg article