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Mar 9, 2023

Understanding Drug Pricing

Congressman Comer Investigates PBMs and Rising Healthcare Costs – Inside View from a Pharmacy and Drug Manufacturer

An investigation was launched by Congressman James Comer into the role of Pharmacy Benefit Managers (PBMs) and how they may be contributing to the rising costs of healthcare. This is welcome news. As both a pharmacy and a drug manufacturer, we at Marley Drug have a unique insight into this problem.


What are PBMs

PBMs are intermediaries between drug manufacturers and health insurance providers that negotiate drug prices on behalf of insurers.

Comer’s Investigation in PBMs

The investigation aims to uncover potential conflicts of interest, unfair business practices, and other factors that may be contributing to the increasing cost of prescription drugs in the United States.

Congressman Comer has requested documents and information from several large PBMs, including CVS Caremark, Express Scripts, and OptumRx, in order to better understand their business practices and pricing strategies. The investigation comes as lawmakers and consumers alike have expressed growing concern over the high cost of prescription drugs in the US, which is often attributed to a lack of transparency and competition in the pharmaceutical industry.

Marley Drug – A Pharmacy Owned by a Drug Manufacturer

As a pharmacy that provides prescription drugs to patients and a drug manufacturer committed to improving healthcare access and affordability for patients, we are thrilled about the investigation into PBMs and rising healthcare costs.

We have seen firsthand how the practices of PBMs can negatively impact both patients and pharmacies, leading to high drug prices and limited access to certain medications.

As a brief background, Marley Drug was founded in 2003. What started as a ‘mom and pop’ shop quickly grew into a nationwide mail order pharmacy that sold medications without the need for insurance. In 2020 Marley Drug was purchased by a drug manufacturer, Medicure, as a way for Medicure to bypass insurance company middleman fees (PBM fees) for its product Zypitamag (pitavastatin). PBM pricing games was precisely why Medicure purchased Marley Drug.

Insight as a Pharmacy

We have 20 years of experience dealing with insurance company headaches.

This problem isn’t new. It’s been around for well over a decade. Patients, employers and taxpayers have been getting ripped off by hidden fees and unethical pricing games, termed spread pricing

We found a way around this pricing schemes by bypassing insurance. In 2012 we launched our Wholesale Price List. It’s a compilation of commonly prescribed chronic care medications that can be bought in longer supply without the need for insurance. It costs $70 for a year's supply, and that price has remained unchanged since its inception.

I was about to cancel my prescription because my monthly cost with insurance was almost $150! Now I can get a 6-month supply for only $37. Thanks Dee for calling and letting me know my options! – Mark T.

Insight as a Drug Manufacturer

We recently celebrated our 25th Anniversary last year. In 2018 we launched our first primary care product, Zypitamag® (pitavastatin) tablets. It was termed a ‘pharmaceutical alternative’ by the FDA to another branded medication, Livalo® (pitavastatin). The key difference being the binding salt used, with Livalo being calcium, and Zypitamag being magnesium. In terms of safety and efficacy they were bioequivalent.

With minimal investment required to get this product approved, at least compared to new-to-market products that require extensive clinical research, we felt comfortable offering this medication at a steep discount to Livalo®. At the time it was selling for around $900 for a 90-day supply. It’s now over $1000.

Our assumption – we would be welcomed by insurance formularies with open arms as an easy way to reduce healthcare costs for insurers. With a Livalo market cap at $330M in 2018 we felt this would be the home run for the healthcare community. How could they say no to saving $300M.

Unfortunately, we were wrong. Our lower retail price to Livalo® made our product less desirable to PBMs, who use negotiated discounts as a revenue generator through a practice called spread pricing. Our lower retail price means there’s less in it for the PBMs.

We were faced with the choice of raising our retail price, which would hurt patients, or find another way. This eventually led to our purchase of Marley Drug, where we could sell medications directly to patients – no middlemen.

We now sell the medication at $34.50/month. A steep discount from $300+ for our branded competitor. The surprising part is that we make just as much selling Zypitamag this way as we would through the insurance route. The only difference is patients, employers, and taxpayers also pay less.

Thank goodness my doctor recommended Marley Drug. My previous medication was over $350 with insurance. Zypitamag is only $30 with no insurance. I would highly recommend Marley Drug for their prices and friendly staff! – David M.

Final Thoughts

We hope that the investigation will bring greater transparency to the pricing and distribution of prescription drugs, and encourage PBMs to negotiate more fairly on behalf of patients and pharmacies alike. We believe that fair competition and pricing practices are essential for ensuring that patients can access the medications they need at an affordable cost, and we are eager to see the results of the investigation.

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