CVS CEO defends pharmacy middlemen, accuses drugmakers of ‘monopolistic’ practices

CVS CEO defends pharmacy middlemen, accuses drugmakers of ‘monopolistic’ practices


David Joyner, a longtime CVS executive, speaks during a Senate Health, Education, Labor and Pensions Committee hearing in Washington, D.C., on May 10, 2023.

Al Drago | Bloomberg | Getty Images

CVS Health CEO David Joyner on Wednesday defended controversial pharmacy middlemen like his company’s Caremark unit, which are widely accused of inflating prescription medication prices, and instead accused manufacturers of “monopolistic tendencies” that keep drug costs high in the U.S. 

Joyner, who stepped into the role in October, spent much of his opening remarks on the company’s fourth-quarter earnings call discussing so-called pharmacy benefit managers, or PBMs. It was atypical for CVS’ quarterly call to begin that way, but comes at a time when lawmakers on both sides of the aisle and President Donald Trump have signaled interest in cracking down on PBMs. 

CVS owns Caremark, one of the nation’s three largest PBMs that collectively administer roughly 80% of prescriptions in the U.S.

Those middlemen negotiate rebates with drug manufacturers on behalf of insurers, create lists of medications known as formularies that are covered by insurance and reimburse pharmacies for prescriptions. But lawmakers and drugmakers alike argue that PBMs overcharge the plans they negotiate rebates for, underpay pharmacies and fail to pass on savings from those discounts to patients.

Joyner acknowledged that rising health-care costs in the U.S. are pressuring patients, employers and the federal government. He blamed factors such as increased patient utilization of services, rising health-care provider costs, labor shortages and “dramatic price hikes” for branded drugs. 

But he said PBMs like Caremark are “one of the most powerful forces helping to offset rising health care costs,” claiming that they are the only part of the drug supply chain solely focused on lowering costs. 

“Our work is a critical counterbalance to the monopolistic tendencies of drug manufacturers,” Joyner said. “This is why PBMs are needed and why manufacturers fight so hard to limit our capabilities.” 

He alleged that branded manufacturers added $21 billion in annual gross drug spending in the first three weeks of January through their price hikes, but did not cite where the figure is from. 

Joyner added that multiple economists have estimated that PBMs generate net value for the U.S. health-care system, more than $100 billion a year.

“No one has demonstrated more success than the PBMs of driving down drug prices,” he said.

However, the pharmaceutical industry and lawmakers argue that PBMs and insurers pocket those savings from negotiated rebates and discounts rather than passing them to patients.

In a statement on Wednesday, PhRMA, the nation’s largest lobbying group for the pharmaceutical industry said PBMs are “under intense, well-deserved scrutiny.” 

“Bipartisan state attorneys general, policymakers in both Congress and state legislatures and the FTC are all investigating these health care conglomerates,” a PhRMA spokesperson said. “They’ve all come to the same conclusion: PBMs are driving up costs and reducing access at the expense of patients, employers, and our health care system.”



Source

Supreme Court endorses Obamacare panel that requires free preventive care
Health

Supreme Court endorses Obamacare panel that requires free preventive care

Demonstrators in support of U.S. President Barack Obama’s health-care law, the Affordable Care Act (ACA), hold up ‘ACA is Here to Stay’ signs after the U.S. Supreme Court ruled 6-3 to save Obamacare tax subsidies outside the Supreme Court in Washington, D.C. June 25, 2015. Andrew Harrer | Bloomberg | Getty Images WASHINGTON — The […]

Read More
Supreme Court rules for South Carolina over bid to defund Planned Parenthood
Health

Supreme Court rules for South Carolina over bid to defund Planned Parenthood

Planned Parenthood signage is displayed outside of a health care clinic in Los Angeles, California on May 16, 2023.  Patrick T. Fallon | AFP | Getty Images WASHINGTON — The Supreme Court on Thursday ruled for South Carolina over its effort to defund Planned Parenthood, concluding that individual Medicaid patients cannot sue to enforce their […]

Read More
Healthy Returns: New weight loss drug data show Eli Lilly is gaining ground
Health

Healthy Returns: New weight loss drug data show Eli Lilly is gaining ground

A sign with the company logo sits outside of the headquarters of Eli Lilly in Indianapolis, Indiana, on March 17, 2024. Scott Olson | Getty Images A version of this article first appeared in CNBC’s Healthy Returns newsletter, which brings the latest health-care news straight to your inbox. Subscribe here to receive future editions. Competition in […]

Read More