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Many insurance companies are paying more than 100 times the retail cost of so-called specialty generic drugs—largely because the pharmacy benefit managers setting the prices often also own the pharmacies, according to The Wall Street Journal (subscription). 

What’s going on: “The cancer drug Gleevec went generic in 2016 and can be bought today for as little as $55 a month. But … CVS Health and Cigna can charge $6,600 a month or more for Gleevec prescriptions, a Wall Street Journal analysis of pricing data found. They are able to do that because they set the prices with pharmacies, which they sometimes own.” 

• After a patent on a pricey medication has run out, competitors can sell cheaper generics, but some—“for cancer, multiple sclerosis and other complicated diseases”—are still costing insurers thousands a month per prescription.

Why it’s a problem: The high costs of these drugs are “undermining the benefits of generics … while saddling patients, many on fixed incomes and insured by Medicare, with considerable deductible payments or other out-of-pocket costs.”

• For specialty medications such as Gleevec, PBMs often “steer” patients toward using the pharmacies they own so that they can benefit from the higher prices being charged there.

​​​​​​Too high:  A Journal cost comparison of 20 generics offered by the Mark Cuban Cost Plus Drug Company—a public-benefit entity that aims to provide high-quality medications at standard markups—and the three largest insurers to Medicare found that the latter charged an average of over 20 times more than the former for prescriptions. 

The NAM’s take: “Manufacturers are calling for reforms to PBMs, which contribute to skyrocketing health costs and drive up the price of medicines for consumers,” said NAM Director of Domestic Policy Julia Bogue.

• “America’s workforce has struggled with high health care costs driven by PBMs for too long. We urge Congress to address the issue as soon as possible.”