5 Slides We’re Discussing: The policy implications of new medicines


Patrick Jones


Panelists discussed the importance of transparency and need for cost reductions on specialty drugs in State of Reform’s recent virtual conversation “5 Slides We’re Discussing: The policy implications of new medicines.” 

The experts called on pharmaceutical companies and pharmacy benefit managers (PBMs) to be more transparent in their pricing and formulary curation. 


Stay one step ahead. Join our email list for the latest news.



The panelists included Cheryl Larson, president and CEO of the Midwest Business Group on Health (MBGH), Robert Popovian, PharmD, senior fellow of health policy at Progressive Policy Institute (PPI), and Laura Minzer, president at Illinois Life and Health Insurance Council (ILHIC).

Larson highlighted that 72% of surveyed MBGH members reported having significant concerns about the affordability of specialty drugs and their coverage on their employer-sponsored plans. She said employers are trying their best to address specialty drug management and work with PBMs and pharmaceutical companies to provide more transparency to help lower costs of these drugs. 

Minzer said these drugs have such higher cost due to their small utilization and specialty of manufacturing. Though specialty drugs only account for 1% of subscriptions, they account for 29% of costs for prescriptions drugs. 


Image: Illinois Life and Health Insurance Council


The panelists attributed this issue to a disconnect in communication and understanding between the employers and PBMs. This shows in how drugs are priced and where the payments end up being managed, either at the PBM, insurer, or employer level. Popovian said:

“We need to keep the PBMs and pharma companies’ feet to the fire, and PBMs need more transparency [and] no more gamesmanship with rebates and fees and everything else. But with pharma companies, they need to come clean. They need to be very upfront about how they set their prices upon launch of these products… It is no longer acceptable for them to say, ‘This is what the market bears.’ No. Tell me exactly how you came up with [the] price. We are all adults, we can figure it out.”

Popovian also noted “misaligned incentives” of PBMs to exclude generic drugs in formularies to incentivize paying more for brand drugs. He said this creates a marketplace where patients are overpaying for their prescriptions. 

However, Minzer said PBM framework is necessary in terms of claim processing and price negotiations.  

In response, Larson said:

“Specialty pharmacies came to be because the PBMs often were not managing specialty drugs appropriately. So, it is just like the wellness industry cropped up because health plans and insurance companies were not effectively managing the lifestyle risks and chronic diseases… I just know we see a lot of overpayment for things that shouldn’t be. So, I have an obligation representing employers to bring that on and figure out ways to work around it.”

You can watch the full video of this discussion above or view it here.