Canadian Drug Maker Medicure Inc. Acquires a U.S.-Based Independent Pharmacy to Market its Cholesterol Drug. What This Could Mean for the Future of PBMs.
The polio vaccine was never patented. The insulin patent was sold for $1. The average price for epinephrine is around $109 while the 2-pack EpiPen sells for somewhere between $650-$700. How does the conversation for the moral value of medication — not just market value — keep getting shoved under the rug?
That’s the question Canadian drug maker Medicure Inc. and Winston-Salem, NC-based Marley Drug were contending with when, in a moment of brilliance, they decided to align their operations for the sake of U.S. patients seeking access to affordable medication.
Loosely translated, “aligning” meant Medicure would acquire Marley Drug, a transaction that was finalized in mid-December 2020.
So why would a pharmaceutical company acquire a pharmacy? And is that even legal?
The answer may surprise you.
“It was an obvious opportunity for us and our patients. Medicure shares our moral mission to cut drug costs for consumers,” says David Marley, founder of Marley Drug along with his wife, Elizbeth. “You have a small pharmaceutical manufacturer who is willing to buck the system with us.”
“Bucking the system” could well be Marley’s motto. In the relatively small world of independent pharmacy, he’s well-known for being a “loud and proud” voice of pharmacy benefit manager (PBM) reform. Among his other advocacy efforts, Marley is the founder of Pharmacists United for Truth and Transparency (PUTT), a non-profit he formed with other pharmacy owners in 2011 to spread awareness of the types of systemic PBM abuse that now dominate the news: spread pricing; contract “gag clauses” that prevent pharmacists from telling patients about therapeutically equivalent — but less expensive — alternatives; extorting rebate kickbacks from manufacturers; reimbursing pharmacies below drug acquisition price while charging patients and their health plans drug cost plus a sizeable mark-up … the list goes on.
Winnipeg-based Medicure has its own view of working with PBMs. The small, publicly-traded company specializes in the development of medications for the U.S. cardiovascular market. Medicure came to prominence after taking its hospital-based drug Aggrastat® from 2% to 65% market share, offering a high-quality therapeutic alternative to a higher-cost brand at an affordable price.
Attempts to make its cholesterol drug Zypitamag® — a new generation statin with a low risk of adverse interaction with a patient’s other medications — commercially available to patients in the U.S. were not so successful. The reason: the contract demands of PBMs, self-appointed administrators of the U.S. prescription drug market who serve as the gatekeepers and price-setters of insurance-covered medications.
“When we launched, our approach, which I think is pretty standard, was to set a high WAC (Wholesale Acquisition Cost) price, but then to offer a steep rebate with the hope of getting coverage from PBMs,” says Medicure president Neil Owens, Ph.D. “Our assumption was that we would gain coverage, and then a provider would decide if it was right for their patient. Unfortunately, we didn’t gain very much coverage and the high WAC ended up being the cash price for anyone without insurance or who cannot use our discount card by law, such as someone on Medicare Part D.”
At first, U.S. PBMs were willing to carry Zypitamag to a limited extent … for $697 per 90-day supply. Yet Medicure can sell Zypitamag for $90 for a 90-day supply and still be profitable.
“As our company moved from a hospital-based product to a consumer prescription product, my expectation was that Zypitamag would be assessed based on its clinical benefit for patients, however, the only factor that seemed to be considered was the rebate provided. I’ve never asked (our PBM contacts) what would happen to our coverage situation if we lowered our price to $90 per 90 days, but I am guessing they would not be interested in providing coverage, and would likely drop our existing coverage,” Owens continues, “and only have (competitor) Livalo as an option.” (note: Livalo continues to raise its WAC price each year and is now $1,117 for 90 days). “Our understanding is that the PBM inflates our WAC price to the insurance company by about 10%, then offers them a rebate of 35–40%, which results in the patient bearing a significant portion of the cost.”
Even with an agreed-upon price of nearly $700 per 3 months’ supply, PBMs would not make Zypitamag available to patients until they had tried — and failed with — at least two other medications. Euphemistically called “step therapy” by PBMs, this “fail first” therapy is supposed to help patients and health plans by requiring patients to use clinically acceptable but less-expensive alternative medications before trying the next, more expensive medication.
PBMs were also going to require providers to seek prior authorization before dispensing Zypitamag. Prior authorization is a delay tactic PBMs use to avoid having patients and their health plans pay for more expensive medication. Most prior authorization requests are denied at least once.
“We struggled to get coverage for Zypitamag, which is a shame because we think it has real benefits for patients,” says Owens. “There were times we offered remarkably high rebates of 75–80% of the WAC price but were still rejected (by PBMs). They said that while the net price was on par with generic statin pricing, the reason they (were denying) coverage was that it would ‘hurt their quality metrics.’”
Tired of the PBM run-around and motivated to get Zypitamag to patients who could most benefit from its use, Medicure decided to bypass the PBMs and sell directly to US consumers. So they made a deal to purchase Marley Drug, an independent pharmacy licensed to dispense medication in all 50 states. Already a Marley Drug vendor, Medicure sees it as the perfect opportunity to expand its ability to provide high-quality medication at an affordable price. “The response from providers has been extremely positive,” says Owen. “They like the simplicity of the process, and insurers aren’t standing between them and the patient. A lower price for patients and straightforward access.”
So, what does this mean for PBMs? And how will this help the US with its high-priced prescription drug problem?
Marley Drug is not an e-commerce site nor an internet pharmacy. It is not a vanity-drug subscription company designed by Silicon Valley millennials. It is a neighborhood pharmacy that, like other pharmacies, fills prescriptions submitted by patients’ doctors. Yet together with Medicure, Marley Drug is poised to disrupt the price of prescription drugs just by doing what drug makers and pharmacists have done for generations: provide a high-quality product at a truly affordable price.
And that could mean the end of shell-game tactics and drug price trickery by PBMs.