Express Scripts Holding Co, the largest pharmacy benefit manager in the United States, said drug price inflation would likely be restrained going into 2017 and that scrutiny into pricing strategies was here to stay.
Express Scripts’ comments come at a time when drug pricing is a hot political topic in the United States.
Prescription benefit managers (PBMs) negotiate drug benefits for health plans and employers, and have in recent years taken an increasingly aggressive stance in price negotiations with drugmakers.
They often extract discounts as well as after-market rebates from drugmakers in exchange for including their medicines in their formularies with low co-payments.
Drug price inflation will unlikely represent a “significant headwind” in 2017, Chief Executive Tim Wentworth said on a call with analysts, noting that the company has not seen the value of rebates change recently.
“You’re probably going to see some restraint compared to what we have maybe seen in the last couple of years.”
“We don’t accept where drug prices are today. We believe they can and should be lower,” Wentworth told Reuters in an email on Wednesday.
Fitch Ratings’ outlook on the healthcare sector is stable, as the sector faces a low risk of deteriorating fundamentals but high levels of event risk due to regulatory and political uncertainty.
The rating agency also noted the issues involved in the drug pricing debate. Fitch said some drug manufacturers’ practice of taking advantage of supply dislocations to increase prices on established products is “not a defensible business model in the long term.” Fitch said companies that launch truly innovative new drugs will continue to command pricing power.
While most U.S. stocks rallied over the post election weeks, shares of biotechnology and pharmaceutical companies retreated after President-elect Donald Trump vowed in a magazine article to crack down on drug prices. Drug stocks fell after Mr. Trump was quoted in a Time Person of the Year article as saying: “I’m going to bring down drug prices.”
Last week, Allergan Chief Executive Brent Saunders touched on the delicate politics of drug-pricing a health-care industry conference in New York City.
“I worry today that the pharma industry has a very false sense of relief or security because of a Trump administration and a Republican-controlled Congress,” Mr. Saunders said. “I think we should recognize the drug-pricing issue is a populist issue. – To think President Trump isn’t a populist, that he won’t jump on the next EpiPen scandal and won’t Tweet against any company that does something like that, you’re fooling yourself.”