How a pharma patent's lifecycle impact a Rx plan's drug spend

From the onset, drugs are priced by the manufacturer and are influenced by FDA regulations that include exclusivity periods and generic launch delays. During the exclusivity period, drug manufacturers want to solidify their market position by handing out coupons directly to the potential product consumer. This strategy circumvents PBM formularies and bypasses employer-based co-pay structures and yearly deductibles. This strategy enables the drug manufacturer to gain market share for its brand. However, drug manufacturer coupons can work against a plan's strategic prescription benefit choices and possibly even the rebate structure, resulting in increased drug spend.

Towards the end of a brand’s patent life manufacturers will offer rebates to PBM’s for premium formulary placement and can negatively impact your organization’s total drug spend. The benefits from a PBM's rebate decisions may not trickle down to benefit their client's drug spend.