A pair of U.S. senators called on the federal government to investigate health insurers that are paying high prices for generic drugs for serious diseases like cancer and multiple sclerosis.
Sen. Elizabeth Warren (D., Mass.) and Sen. Mike Braun (R., Ind.) sent a letter on Wednesday to the U.S. Department of Health and Human Services’ Office of Inspector General requesting an investigation into the high drug prices and any role played by health insurers’ shared ownership with the pharmacies that often fill the prescriptions.
The letter cites a recent article in The Wall Street Journal that reported that big health insurers Cigna Group, CVS Health and UnitedHealth Group are paying multiples more for drugs such as cancer therapy Gleevec and multiple-sclerosis treatment Tecfidera than what manufacturers charge for generic versions.
“These findings are alarming,” the senators said of the Journal article in its letter to HHS Inspector General Christi Grimm. “This anticompetitive behavior raises costs, hurts independent pharmacies, and undercuts Congress’ ability to rein in excessive profits of insurance companies.”
Generics are supposed to help health plans keep a lid on drug spending. Healthcare experts say insurers, even though they reimburse pharmacies for drugs, can profit by charging high prices if their parent companies also own pharmacies and other players in the drug-supply chain. That is because insurers often steer patients to use their own pharmacies, keeping the money under the same roof.
Cigna owns Express Scripts, a pharmacy-benefit manager, or PBM, that negotiates drug prices with pharmaceutical companies, and the specialty pharmacy Accredo. CVS operates the Caremark PBM, as well as health-insurer Aetna and thousands of retail pharmacies.
UnitedHealth, the largest U.S. health insurer, also owns both a PBM and specialty pharmacy in addition to employing tens of thousands of U.S. doctors.
UnitedHealth declined to comment. Cigna and CVS didn’t respond to requests for comment.
The senators also asked the Health Department’s investigators to examine whether the healthcare companies are able to dodge a federal law that requires insurers to allocate no more than 15% to 20% of insurance premiums to profits and administrative costs, known as the Medical Loss Ratio, or MLR.
“By owning every link in the chain, a conglomerate like UnitedHealth Group…can send inflated medical payments to its pharmacy,” and appear to be in compliance with the MLR requirements while keeping more money for itself, the senators wrote.