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Pharma CEO: Let's have transparency in prescription drug pricing


It's time for pharmaceutical companies and others to innovate and disrupt the distribution side of treatment.

Josh Disbrow

Courtesy of Josh Disbrow

America leads the world in developing prescription drugs. But we're far less savvy at ensuring patients can easily afford and access them.

Our process of getting patients the medication they need is opaque and confusing. Almost a quarter of Americans with insurance have reported that a prescription was unavailable through their plan or required a very high copay. Nearly one in five were surprised to discover that their plans wouldn't pay for care they thought was covered.

Americans deserve better, starting with greater transparency. It's time for pharmaceutical companies and others to innovate and disrupt the distribution side of treatment, not just the medical side.

The current system is overloaded with middlemen who perform their functions behind closed doors and keep the results to themselves through non-disclosure requirements. Patients and their caregivers don't have a clue what's going on.

Take the little-known but intimate relationship between insurers and businesses known as pharmacy benefit managers. PBMs, which work on behalf of insurers, negotiate aggressively with drug companies for discounts. Those drug manufacturers routinely offer discounts of 30%, 50%, or even 70% -- or more -- in exchange for the PBM agreeing to give them preferential treatment on insurers' formularies, or lists of covered drugs.

Currently, this process is opaque to patients. It's made all the murkier by the fact that the three biggest insurers in the country either own or are owned by the PBMs they work with, together controlling nearly 80% of the prescription drug market. This "vertical integration" makes the question of who's paying for what even harder for patients to figure out.

Unbeknownst to their customers, for example, insurers often base coinsurance payments off the list price of a drug, not the actual price the insurer pays. Nothing requires insurers to pass the discounts on to patients in the form of lower out-of-pocket payments, so they don't.

Nearly 25% of insured adults report that their insurance didn't cover a prescription or charged a "very high copay" in the past 12 months, per the Kaiser Family Foundation. And about 80% of insured adults who reported having trouble paying a medical bill in the past year cited high deductibles or expensive copays as a reason.

It's time for major change. One emerging disruptor is the Mark Cuban Cost Plus Drug Company. The famous entrepreneur sees so much fat in the current system that he believes he can profitably buy medications directly from manufacturers and deliver them to patients at home for a flat, transparent 15% markup. In effect, he's saying out-of-pocket costs are so bloated by the PBM/insurer racket that he can deliver the same essential medications at less than the coinsurance cost.

Other delivery innovators like San Francisco-based Alto Pharmacy, now an affiliate of the Mark Cuban venture, are also developing models offering patients lower costs with personalized consultations. CNBC named Alto No. 6 on its top 50 disruptors list for 2023.

The nation's leading pharmaceutical companies should be at the forefront in demanding transparency in the drug distribution system. After all, they get most of the blame for high drug costs, notwithstanding the $27.6 billion in gross profits PBMs made in 2022. Yet the big drug makers are reluctant to upset the applecart.

That means it's up to smaller companies like mine. We can afford to be pioneers in improving patient experiences. In fact, we can't afford not to.

Aytu has developed a transparent drug pricing plan that works directly through our 1,000-plus RxConnect partner pharmacies nationwide to deliver our products at out-of-pocket costs nearly 50% lower. Currax Pharmaceuticals is offering its weight-loss medication Contrave directly to patients through their CurAccess Program at a maximum monthly cost of $99.

These new, disruptive approaches to drug distribution are just what the system needs. It's all about transparency bringing power to patients — and small drugmakers can lead the way to help restore that power.

Josh Disbrow is chairman and chief executive officer of Aytu BioPharma.

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