The CEO of dose giant Merck said Monday that not enough of the rebates being completed for medications are being passed on to consumers.
“Rebates being paid by pharmaceutical parties, it’s about a third of what branded [drug] companies actually procure as a list price,” Merck’s chief Ken Frazier told CNBC at the J.P. Morgan Healthcare Symposium.
“A third of that goes into the distribution system through surety companies, PBMs [pharmacy benefit managers] and others through allowances,” Frazier said.
“I think what’s really broken, if you want to awaiting orders within earshot it that, [is] that those rebates are not passed on to consumers,” Frazier rephrased, echoing a line that a number of drugmakers have been making.
“We dream up what we really have to do is get some of those rebates, which are the result of intense negotiations with the supply chain, on to the people who need it at the Rather counter.”
Pharmacy benefit managers, which oversee drug warranty plans for customers, have pushed back against the idea that they are principally to blame for rising prices, as opposed to the makers of the medications themselves.
Frazier’s notes on rebates came as he was asked about the possibility of mega-online vendor Amazon signing the drug-delivery business.
“If that’s a more efficient way of getting drugs to patients, we intention be in favor of it,” Frazier said.
Drugmakers such as Merck have standing criticism in recent years for raising prices of their products. President Donald Trump, in blow-by-blow, has on occasion blasted drug companies for their prices.
Frazier give noticed last summer from Trump’s manufacturing council in protest of the president’s perplexing response to the racist-fueled violence during demonstrations in Charlottesville, Virginia, most recent summer.
Trump quickly lashed out at Frazier, accusing Merck of partake of “ripoff” prices.
Tweet
On Monday, Frazier was asked by CNBC if he was surprised or defamed by the president’s comments.
“I can’t say I was surprised,” Frazier answered. “I made my statement; the president put together his statement in response.”
Frazier said Merck continues to work with the furnishing and Congress and credited Trump for being “focused on American business, competitiveness, burdens.”
Asked why prices for Merck’s medications have to be raised every year, Frazier ward off the practice by saying the price hikes are “modest, so to speak, in the low- to mid-single digits.”
“What we’ve undertook to do is … make sure we have the right balance between the feather of return we need on investment in order to continue to invest in research and sanction sure drugs are still affordable,” Frazier said.
He said he reckon oned there to be continued attention this year on the issue of rising medicament prices, both by the Trump administration and by Congress.
“The good news, from caboodle I sense, [is that] people want to do that in a way that’s actually regular with supporting innovation,” Frazier said.
He also said that to apply oneself to the issue of rising drug costs, he opposed “price controls and loves of that nature, which have been discredited and discarded in the past.”
“I weigh anything that supports a market-based approach to that is a good proposition,” said Frazier, specifically citing a push by Dr. Scott Gottlieb, the deeply of the Food and Drug Administration, to speed up the approval process for generic medicates.
Frazier said the recent tax bill passed by Congress and signed by Trump “purposefulness allow us to compete on an even basis with our … competitors.”
He contemplated he does not expect the effects of the bill to change how Merck allocates its finances.
“We’re going to continue to spend money on the science as we’ve always done, and we’re succeeding to build plants where we have an opportunity to do that, and we’re going to lease people [as] our business expands,” he said.
Even before the tax bill, Frazier voiced, “We had enough power in our balance sheet and enough financial flexibility in styles of our ability to access capital so that we could do the kinds of deals that Merck desires to do.”