Notable Entrepreneur Rates President's Online Prescription Drug Proposal as 'B'
A renowned entrepreneur has graded a new online prescription drug platform proposed by the President as a 'B'. It's still an open question, but this new initiative could bring a significant change to how patients buy their medicines.
The President recently unveiled plans to introduce a government-managed website where consumers can purchase prescription drugs directly from the manufacturers. This would bypass the need for Pharmacy Benefit Managers (PBMs), who usually act as intermediaries in these transactions. The site is expected to be operational in a few years.
Entrepreneur's View on the New Platform
This famous entrepreneur, who is also a billionaire venture capitalist, gave his thoughts on the President's initiative. He believes that this could be beneficial for patients and could even help his own business, which operates under a similar concept. He expressed confidence in the team working on this project, but based on what is known so far, he gave it a 'B' rating.
He raised the question, "Why not an A?" His reasoning for this is that PBMs' stock prices didn't plummet. He thinks this indicates that people don't expect much to change for PBMs, and they will find ways to compensate for lost revenue from patients, companies, and other payers. He further noted, "It's still rigged to benefit the big PBMs," but he believes the new platform could have a chance if they force PBMs to change. If that happens, he believes the President should get all the credit.
When asked about the proposed website, the entrepreneur stated, "it's just a listing site.. And as long as they include my business, given we typically offer the lowest prices for over 90% of prescriptions, I'm all for it!"
Pharmaceutical Companies' Participation
Alongside the announcement of the new website, it was mentioned that a leading pharmaceutical firm plans to list some of its products on the site. They will offer all their medicines for Medicaid at a reduced rate. In return, the company will receive a three-year exemption from tariffs.
The majority of the company's primary care treatments and some select specialty brands will be offered at savings that could go up to 85%, with an average of 50% savings.
The Entrepreneur's Online Pharmacy
The entrepreneur, who established an online pharmacy with a radiologist partner a few years ago, also eliminates intermediaries in the supply chain. Their business model involves offering drugs at a 15% markup above the manufacturer's wholesale price.
Currently, access to drugs in the US is controlled by three large PBMs, which account for around 80% of the market. Despite the announcement of the new online prescription platform, the stock prices for these three companies remained stable.
PBMs typically receive rebates from drug manufacturers for giving their products favorable placement on formularies. These rebates are often tied to the list price, resulting in higher-priced drugs generating larger rebates. This creates an incentive for PBMs to favor certain brand-name drugs over cheaper generics or biosimilars if the manufacturer offers a bigger rebate. While insurers claim these rebates help lower overall costs, critics argue the system inflates prices and contributes to higher insurance premiums for patients.
Requests for comments from the White House have not been answered yet.