CVS Health CEO Larry Merlo pushed back against claims that industry middlemen drive up drug prices, disclosing that its pharmacy benefit arm keeps just 2 percent of the rebates it processes, The Wall Street Journal reports.
The drugstore chain owns CVS Caremark, one of the largest pharmacy benefit managers in the nation. PBMs are responsible for contracting with pharmacies, negotiating rebates or discounts and processing prescription drug claims for insurers. Critics have long blamed these middlemen for the rising drug prices and high out-of-pocket costs for patients because these rebates are often confidential.
"Drug manufacturers want you to believe that increasing drug prices are a result of them [being] happy to pay rebates and that PBMs are retaining these rebates," Mr. Merlo told the WSJ. "And this is simply not true."
During a conference call Aug. 8 discussing the company's second-quarter earnings, Mr. Merlo said CVS expects 3 percent, or $300 million, of its 2018 earnings to come from rebates.
In addition, Mr. Merlo disclosed that his company has generate tens of billions of dollars in rebates and 98 percent of those funds are passed to its clients.
CVS's pushback is the latest in the debate over who is responsible for increasing drug prices in the U.S.