Trump’s Demand for Direct Drug Sales Stokes Industry Interest

Drugmakers are responding to President Donald Trump’s call to launch direct-to-consumer sales, sparking questions about how the strategy could upend the industry’s traditional players—or help preserve the status quo.

Trump’s push for drugmakers to offer direct sales at the lowest price offered in other developed nations is stoking a burgeoning tactic by drugmakers aimed at ending rebates they pay to pharmacy benefit managers and health plans. But the strategy’s potential to lower patients’ costs is still unclear.

Manufacturers are building a variety of direct-to-consumer pipelines that can either use patients’ insurance plans or bypass them in favor of cash payments. Industry observers say the range of options makes it hard to predict what the ultimate impact on insurers, pharmacy benefit managers, pharmacies, and wholesalers will be, and whether the new world benefits drugmakers more than consumers.

“It looks like they’re offering reduced prices, when, in fact, those prices are still unaffordable for people,” said Anna Kaltenboeck, president of Verdant Research and a former adviser to the Senate Finance Committee under ranking member Ron Wyden (D-Ore.).

If drugmakers were serious about lowering costs for consumers, Kaltenboeck said, they could simply lower their prices across the board.

“This is yet another iteration of trying to avoid the conversation that we need to have about the way in which pharma companies set list prices in the United States,” she said.

Drugmakers contacted by Bloomberg Law declined to elaborate on their programs.

Drug pricing analysts—and some pharma executives—expect that direct sales will likely only have a major impact on certain drugs that aren’t broadly covered—like weight-loss drugs—and for patients who are either underinsured or uninsured. Most patients who use their insurance will likely pay an amount similar to their current copay. Patients who don’t use their insurance will likely pay more.

Curbing Payouts to PBMs

Multiple drugmakers are in talks with the White House. Eli Lilly & Co., Pfizer Inc., Novo Nordisk A/S, and Bristol Myers Squibb have already launched their own direct sales, while AstraZeneca Plc, Roche, Merck KGaA, and GSK Plc have also expressed interest.

Manufacturers’ main goal is to end percentage-based rebates to PBMs that critics say drive up prices. But Eli Lilly’s FAQ page indicates the program doesn’t offer consumers additional savings.

“LillyDirect’s focus is on seamless access to additional resources for consumers as they navigate the complex healthcare system,” the website says.

Sales don’t seem to be “gangbusters” for drugmakers just yet, said Mark Ey, chief operations officer of the National Community Pharmacists Association.

“They’ve been stopgap measures, I think, to get them to where they think the market will go, and they don’t even know that they have that answer yet,” he said. “We’re all still circling the target, trying to decide exactly where that lands.”

Drugmakers’ relationships with the telehealth providers that patients can connect with through their platforms are already drawing scrutiny. A July Senate report questioned manufacturers’ ties to their telehealth partners, finding the doctors issued a high number of prescriptions for that drugmaker’s product.

Eli Lilly said the report “mischaracterizes Lilly’s intent,” and that doctors are not incentivized to prescribe its drugs. LillyDirect “helps patients navigate a complex and cumbersome healthcare environment,” the company said.

Industry Concerns

The Pharmaceutical Care Management Association, which represents PBMs, said direct sales could benefit some consumers but can’t replace the clinical and administrative benefits PBMs offer patients and insurers.

“In most cases however, patients will spend less out of pocket and face fewer safety concerns when their medications are delivered through their prescription drug benefits at their pharmacies and with their doctors involved,” the group said.

Other industry groups are open to participating in the new models, but also harbor some concerns. Pharmacists worry the strategy could undercut safety monitoring.

“It would be potentially catastrophic if you have—especially seniors—getting multiple meds from multiple sources, and no one reviewing those meds and what they could potentially do when taken together,” Ey said.

The Blue Cross Blue Shield Association, meanwhile, said it was concerned direct sales could incentivize the use of more expensive brands over cheaper rivals or generics.

“More spending on medications drives up premium costs for all of us,” BCBSA said.

Health insurers and PBMs would likely see any model that cuts them out as a threat, drug pricing experts say.

“Whatever we say about PBMs and their strengths and weaknesses—and they have many weaknesses—but one thing they’re very good about is negotiating prices,” said Ateev Mehrotra, chair of the Department of Health Services, Policy and Practice at the Brown University School of Public Health.

The delivery system still includes a number of other rebates, said Laura Hobbs, senior vice president of health-care policy at Washington Analysis LLC and former manager of policy and regulatory affairs at OptumRx, a leading PBM.

“Direct-to-consumer always, I think, sounds better than what it is,” she said.

Employer Market

Breaking into the employer market—which covers 60% of Americans under 65—could accelerate the impact of direct sales.

Some carve-out models for specialty drugs already exist, Ey said. But it’s not clear whether PBMs and other third-party administrators would agree to relinquish control over a wider array of medications.

“These potential alternative distribution pathway models could effectively be rolled up in a couple of months because the infrastructure is there. It’s just getting the employer groups to carve them out from their traditional PBM modeling,” Ey said. “And the big question will be if they go to the insurance brokers and the TPAs and demand it, will they allow it?”

Those decisions are ultimately in employers’ hands, PCMA said.

“PBMs offer employers flexibility to design pharmacy benefits, and they make the final call on how benefits are structured to meet the needs of their employees.”