Food and Drug Administration Commissioner Scott Gottlieb in an interview Tuesday blamed high drug prices, in part, on the "wacky" system where pharmaceutical companies discount their drugs but patients don't see those savings.
Drugmakers negotiate discounts, known as rebates, with pharmacy benefit managers in order to secure a spot on their formularies. Employers typically use these rebates to lower premiums for employees across the board rather than giving them to the patients who are paying for the drugs.
"[Patients are] spending money to subsidize everyone else's premium," Gottlieb said in an interview with CNBC's "Squawk Box" on Tuesday. "The sick people are helping to subsidize the healthy people. That's not how insurance is supposed to work. So we've got a wacky system where the discounts aren't flowing to the people."
Lawmakers are set to grill executives from seven drugmakers — AbbVie, AstraZeneca, Bristol-Myers Squibb, Johnson & Johnson, Merck, Pfizer and Sanofi — today at Senate Finance Committee hearing. They are sure to ask about high list prices. Drug companies say these prices are merely starting points and that few people really pay these.
Rebates are a favorite target of pharmaceutical companies, who say pharmaceutical benefit managers extract huge discounts but keep them for themselves instead of sharing the savings with patients. The PBMs say it's drugmakers alone who set high prices.
The Trump administration has put forth a proposal that would pass an estimated $29 billion in rebates paid to PBMs to consumers. Gottlieb said the hope is that by removing the rebates, the administration hopes drugmakers will cut list prices for drugs.
He said there's a possibility lawmakers will come together on legislation to address high drug prices.
"I think we're seeing a consensus emerge in Washington for some kind of bipartisan action" he said.
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