Senator Questions Incentives That Drive Up Cost Of Prescriptions

Capitol Comments

Senator Robert Menendez

WASHINGTON, D.C. – U.S. Senator Bob Menendez (D-N.J.), a senior member of the Senate Finance Committee, during a hearing questioned witnesses about the impact pharmacy benefits managers (PBMs) have on the prescription drug supply chain and how their warped incentive structure drives up prices for patients and consumers. PMBs are entities that manage prescription drug benefits and pharmacy networks on behalf of health plans, employers, and other payers.

“Pharmacy benefit managers are key players in alleviating a patient’s financial burden at the pharmacy counter as they frequently set patient out-of-pocket costs based on a drug’s list price. The higher the list price, the more the patient pays, an obvious burden,” said Sen. Menen - dez. “Less obvious, but equally concerning, is that PBMs benefit significantly from high list prices and have no incentive to choose lower-priced drugs to drive down patient cost. PBMs extract rebates from manufacturers based on list price in exchange for a manufacturer’s drug receiving formulary placement. Those rebates are passed on to plans and employers, but almost never to patients.”

Jonathan Levitt, a Founding Partner of Frier Levitt Attorneys at Law located in Pine Brook, NJ, served as a witness during the committee hearing. He agreed with the Senator that it would be better for patients if the prescription drug supply chain was de-linked from the list price and if PBMS and other supply chain entities were paid flat fees for the services they provide.

Sen. Menendez emphasized how PBMs prefer prescription drugs with a higher list price versus those with a lower list price, as appears to be the case for Humira biosimilar drugs introduced into the market to treat rheumatoid arthritis, because they can obtain larger rebates. PBMs do this even though the patient would pay significantly less if they selected the drug with the lower list price.

“The Pharmacy Care Management Association which represents the PBMs, includes research on their website that states, “High list prices hurt patients who must pay these prices. If list prices were lower, out-of-pocket payments based on list prices would be lower and more affordable,” added the Senator. “If PBMs themselves acknowledge lower list prices would help patients at the pharmacy counter, why would they still place preference on higher list price products when a drug company has given them a better option for patients?”

The Senator highlighted his concern about how mergers and acquisitions in recent years have resulted in CVS Caremark, Express Scripts, and OptumRx now controlling approximately 80 percent of all U.S. prescription drug claims.

“This level of concentration gives these PBMs market power over data, drug cov- erage, and contracting. The hyper-consolidation, with little to no regulatory oversight, creates inappropriate negotiating leverage that discourages competition and makes it difficult to achieve transparency, affordability, and timely access for patients,” concluded the Senator.

Sen. Menendez has long advocated for creating a more affordable health care system for every New Jerseyan and Americans all across the country. Last year, he played a pivotal role in passing the Inflation Reduction Act, which capped the price of insulin to $35 a month for seniors on Medicare, and he authored a smoothing provision that also capped Medicare beneficiaries’ out-of-pocket costs at $2,000 a year.

Each year, that will benefit about 46,000 New Jersey Medicare beneficiaries who would otherwise have out-of-pocket costs above the cap, according to estimates from the Kaiser Family Foundation (KFF). Because of Sen. Menendez’ leadership, for the first time, all 1.2 million New Jerseyans with Medicare Part D will have the peace of mind of knowing their pharmacy costs are capped.

Land:

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Democrats in Trenton cut their funding in the state budget.”

This is in reference to the funding formula that New Jersey lawmakers pushed through that redirected state aid away from some districts, like Jackson, in 2018. The cuts have been cumulative and have resulted in millions of dollars of lost revenue.

Council President Flemming explained later during the meeting that “the parcels (of land) were being held for future expansion but that isn’t happening now.”

Superintendent Nicole Pormilli told The Jackson Times that the purchase that was being negotiated includes small parcels of district-owned land that have been sitting dormant for decades and that the district cannot use for any purpose.

“This is a very good example of how the township and the school district work together for the benefit of students and taxpayers,” Pormilli said.

Board of Education President Giuseppe Palmeri said the funds from the purchase are much needed at this time, as the Board continues to work on the district’s budget in the wake of millions of dollars of lost state aid and rising costs.

“This land purchase will create open space for recreational purposes in our town and the purchase will benefit our students at a time when we need these funds the most,” Palmeri said.

The Council voted to purchase the 114 acres from the Board of Education for around $1 million and since Open Space funds will be used, no additional taxes will be collected for this purchase.

When finalized it will add to the township’s recreational facilities with the addition of new hiking and biking rails along with playgrounds for public use.

During last month’s Board of Education meeting the subject of possibly selling Rosenauer Elementary School to make up for the state aid loss was brought up by Pormilli.

The school based in the Brookwood 1 neighborhood was said to be in consideration of possible sale as Pormilli said all options were being considered but added that most likely, this wouldn’t occur as its sale would cause other issues for the school district such as added bus transportation costs and increases of class sizes to the school that would be receiving Rosenauer students.

Development:

Continued From Page 1 will bring water to that site. You can read the transcripts of the Planning Board that addressed it and get a better idea of the entire project.”

Show Us A Map

Resident Greg Staffordsmith asked if the Township could better identify areas on their website perhaps with a map that would include “a list of all the current projects that are under construction and what type of projects they are so that people at a glance can see just how the town is growing?”

“So that we can all in one shot have an idea of how many units are being built and date of completion?” he added.

Business Administrator Terence Wall responded, “it should be updated accordingly and we will look at it. We will make sure it is updated and will work with the engineering and zoning to make sure it is in a very clear format.”

Volunteers Have Cats Available For Adoption

JACKSON – Calling All Cats is a cat rescue group made up of volunteers, some of whom work at a spay and neuter clinic. People would drop off unwanted cats. As a group, they save the babies that are left alone, the countless mothers that have had numerous litters and those that are losing or have lost their home. Introducing Rome. He is one of Clarissa’s seven kittens. This handsome little boy is outgoing, social, adventurous, and loves to be the center of attention. He loves to play with his siblings but also loves his snuggle time. Rome would love to go home with one of his siblings or go

─Photo courtesy Calling All Cats to a home with other kitty friends. He is neutered, up to date on all medical and microchipped.

To help humanely lower the feline population, they spay and neuter feral cats and then find homes for the friendly adults and the offspring that have been born. The rescue works extremely hard to find the best homes for cats of all shapes, sizes, colors and ages. While these cats wait, they are cared for in safe, loving, and nurturing foster homes

To start the application process, visit Calling All Cats on Facebook and Petfinder.com.