David Joyner, a longtime CVS govt, speaks throughout a Senate Well being, Schooling, Labor and Pensions Committee listening to in Washington, D.C., on Might 10, 2023.
Al Drago | Bloomberg | Getty Photographs
CVS Well being CEO David Joyner on Wednesday defended controversial pharmacy middlemen like his firm’s Caremark unit, that are extensively accused of inflating prescription medicine costs, and as an alternative accused producers of “monopolistic tendencies” that maintain drug prices excessive within the U.S.
Joyner, who stepped into the position in October, spent a lot of his opening remarks on the corporate’s fourth-quarter earnings name discussing so-called pharmacy profit managers, or PBMs. It was atypical for CVS’ quarterly name to start that means, however comes at a time when lawmakers on each side of the aisle and President Donald Trump have signaled curiosity in cracking down on PBMs.
CVS owns Caremark, one of many nation’s three largest PBMs that collectively administer roughly 80% of prescriptions within the U.S.
These middlemen negotiate rebates with drug producers on behalf of insurers, create lists of medicines often known as formularies which might be lined by insurance coverage and reimburse pharmacies for prescriptions. However lawmakers and drugmakers alike argue that PBMs overcharge the plans they negotiate rebates for, underpay pharmacies and fail to move on financial savings from these reductions to sufferers.
Joyner acknowledged that rising health-care prices within the U.S. are pressuring sufferers, employers and the federal authorities. He blamed elements similar to elevated affected person utilization of providers, rising health-care supplier prices, labor shortages and “dramatic worth hikes” for branded medicine.
However he stated PBMs like Caremark are “some of the highly effective forces serving to to offset rising well being care prices,” claiming that they’re the one a part of the drug provide chain solely centered on reducing prices.
“Our work is a vital counterbalance to the monopolistic tendencies of drug producers,” Joyner stated. “For this reason PBMs are wanted and why producers struggle so arduous to restrict our capabilities.”
He alleged that branded producers added $21 billion in annual gross drug spending within the first three weeks of January by means of their worth hikes, however didn’t cite the place the determine is from.
Joyner added that a number of economists have estimated that PBMs generate internet worth for the U.S. health-care system, greater than $100 billion a yr.
“Nobody has demonstrated extra success than the PBMs of driving down drug costs,” he stated.
Nonetheless, the pharmaceutical business and lawmakers argue that PBMs and insurers pocket these financial savings from negotiated rebates and reductions quite than passing them to sufferers.
In a press release on Wednesday, PhRMA, the nation’s largest lobbying group for the pharmaceutical business stated PBMs are “below intense, well-deserved scrutiny.”
“Bipartisan state attorneys basic, policymakers in each Congress and state legislatures and the FTC are all investigating these well being care conglomerates,” a PhRMA spokesperson stated. “They’ve all come to the identical conclusion: PBMs are driving up prices and lowering entry on the expense of sufferers, employers, and our well being care system.”