Comparing International Drug Prices to Prices in the United States

Many studies have examined the pricing differences in prescription drugs between the United States and other countries around the globe. Those studies have consistently found that the U.S. is paying more for prescription medications than our global peers.

For years, policy proposals at both the federal and state levels have sought to address the affordability of prescription medications in the U.S. by accessing international prices.

At times, these proposals have been to benchmark U.S. drug prices to international prices. Other proposals have sought to directly source the medications internationally at their lower cost rather than through using the existing U.S. distribution system. Overwhelmingly, studies of international prices have resulted in aggregate figures of savings but have been sparse on which drug prices are actually producing the savings.

In this report, we undertook a study of international drug prices that sought to not only confirm that international prices remain cheaper than the prices incurred by prescription drug programs in the United States (like Medicare), but to provide transparency around price differentials on a product-to-product basis.

3 Axis AdvisorsApril 14, 2023Drug Pricing, International drug prices, rebates, Medicare, Australia, Canada, WAC

Estimates of U.S. Brand Drug Commercial Net Prices

Drug pricing is complicated, and as lawmakers and consumers lament the rising costs of medicines, often overlooked in the discourse is the impact of the growing disconnect that exists between the list prices of medicines and the net prices of those drugs after all drugmaker concessions are accounted for. Further complicating matters is the degree with which those concessions are – or more importantly, aren’t – being reflected in the prices paid patients and plan sponsors. In this study, we used the publicly available Federal Supply Schedule (FSS) pricing data to develop a net drug price estimate for brand pharmaceuticals in the U.S. We then analyzed our estimate to known net drug prices and found that our estimate produced similar results to the stated net price by the manufacturer. While other researchers and organizations have developed estimates of net prices based on a “top-down” approach by exploring drug manufacturer financial statements and sales data, our methods may be best described as “bottom-up,” as they are developed for individual products based upon the public FSS data.

3 Axis AdvisorsFebruary 15, 2023Federal Supply Schedule, VA prices, rebates, Medicare Part D, DIR, insulin

Pharmacy benefit manager exposé: How PBMs adversely impact cancer care while profiting at the expense of patients, providers, employers, and taxpayers

In February 2022, Frier Levitt, a national boutique law firm focused exclusively on healthcare and life sciences, and the Community Oncology Alliance, a non-profit organization dedicated to advocating for community oncology practices and the patients they serve, released an extensive deep-dive into practices employed by large pharmacy benefit managers (PBMs) that can exacerbate high drug prices, restrict patient choice, create inequitable treatment among providers, and create numerous market distortions that can cause plan sponsors and patients to overpay for their medicines. 3 Axis Advisors supported the study through the creation of infographics derived from our prior analyses of millions of prescription drug claims across multiple states.

3 Axis AdvisorsFebruary 17, 2022PBM, Oncology, rebates, DIR, Medicaid, Medicare Part D, Specialty

Understanding the Evolving Business Models and Revenue of Pharmacy Benefit Managers

Pharmacy benefit managers (PBMs) are situated at the center of the U.S. pharmaceutical ecosystem, overseeing pharmacy benefits on behalf of payers, including employers, multi-employer and other health plan sponsors, and public and private insurers, for the vast majority of individuals with prescription drug coverage. While the primary role of PBMs is to provide administrative services to payers, revenue flows to PBMs from multiple stakeholders in the supply chain, not just their clients. Given that PBMs claim to be the “only members of the prescription drug supply chain that are working to lower drug costs,” discussions concerning PBMs’ impact on the market can be informed by a better understanding of the overall financial incentives driving PBM behavior, as well as possible sources of conflict with their assertion. This analysis reveals that PBMs utilize multiple avenues and business activities to exert influence over, and derive revenue from, others in the pharmaceutical supply chain.

3 Axis AdvisorsDecember 2, 2021PBM, Drug Pricing, rebates, Spread pricing

Pharmacy Reimbursement Trends in Massachusetts

The Massachusetts Independent Pharmacists Association (MIPA) commissioned 3 Axis Advisors, LLC (3 Axis) to investigate pharmacy reimbursement trends following the Massachusetts Health Policy Commission (HPC) published a DataPoints issue titled, “Cracking Open the Black Box of Pharmacy Benefit Managers.” This report further explores the concerns raised by HPC including investigating PBM “spread” pricing, underwater claim reimbursements, high cost specialty medication trends and more. Overall, this study presents strong evidence that current pharmacy compensation is, by Massachusetts’ own standards, not appropriate. The transparency on the data and methods, combined with ample education on the inner workings of the drug supply chain provided in this study, should assist Massachusetts in achieving its goal of providing “appropriate compensation for both pharmacies and PBMs.”

Sunshine in the Black Box of Pharmacy Benefits Management: Florida Medicaid Pharmacy Claims Analysis

Much of our previous state Medicaid program drug pricing work has been concentrated on diagnosing and sizing a largely overlooked practice called “spread pricing.” The tactic, typically deployed by pharmacy benefit managers (PBMs), involves a PBM paying a pharmacy one price for the dispensing of a prescription, billing a different rate back to a plan sponsor, and pocketing the difference as a spread. As this massive cost-driver is eliminated from state Medicaid programs across the country, 3 Axis Advisors was asked to analyze 350+ million claims worth of pharmacy data in the Florida Medicaid program to assess spread’s influence on the state’s drug costs. Our analysis found very little spread pricing in the program up until 2019, where it appeared to be all but eliminated. However, in our research, we found a slew of other perplexing practices embedded in the prescription drug supply chain that highlight several warped incentives, pricing distortions, and conflicts of interest that stand to drive up costs and compromise robust provider access. As spread pricing is eliminated from more state programs, this report highlights how PBMs and MCOs pivot their pricing and management of pharmacy benefits in a post-spread world.

3 Axis AdvisorsJanuary 30, 2020Medicaid, Managed Care, Florida, Centene, WellCare, Drug Pricing, CVS, Pharmacy, Specialty, rebates

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