Healthy Returns: Amgen joins a growing list of drugmakers selling directly to consumers
News Summary
Amgen announced its AmgenNow program, offering its cholesterol-lowering drug Repatha directly to consumers at a cash price of $239 per month, nearly 60% below its current list price. This move responds to pressure from President Donald Trump's administration to lower U.S. drug prices and follows similar initiatives by Eli Lilly, Novo Nordisk, Pfizer, and other pharmaceutical companies. President Trump's administration has been pushing for direct-to-consumer sales through policies like the "most favored nation" and platforms like TrumpRx.gov, aiming to bypass pharmacy benefit managers (PBMs) and other intermediaries. Pfizer has agreed to offer discounts of 50% to 85% on TrumpRx.gov. CMS Administrator Dr. Mehmet Oz supports these efforts, committing that 95% of U.S. drugs will have "proud" pricing by the end of Trump's term.
Background
President Donald Trump's administration has been actively working to lower U.S. drug prices through policies like the "most favored nation" and by encouraging direct-to-consumer (DTC) sales models. This strategy aims to bypass intermediaries such as pharmacy benefit managers (PBMs), potentially reducing patient costs and capturing revenue currently flowing through these channels. The Trump administration has also launched TrumpRx.gov as an online platform for discounted direct purchases of branded drugs. These initiatives are part of a broader healthcare agenda following his re-election and build upon cost-reduction efforts from his first term, such as capping certain Medicare drug co-pays at $35 per month. Concurrently, Medicare drug price negotiations under the Inflation Reduction Act are also actively underway.
In-Depth AI Insights
What are the true underlying motivations for pharmaceutical companies adopting DTC models, beyond the stated goal of patient affordability? - The deeper motivations for pharmaceutical DTC models are more strategic, focused on reclaiming pricing power and profit margins, rather than solely responding to government calls for lower prices. By bypassing PBMs, drugmakers can directly control a portion of the pricing and avoid paying substantial rebates and discounts to intermediaries. - This is also a defensive strategy under government pressure. The Trump administration's "most favored nation" policy and price negotiation threats compel drugmakers to proactively adopt DTC to demonstrate a commitment to "lower prices," potentially mitigating more stringent regulatory interventions. - The DTC model also provides pharmaceutical companies with direct patient data and customer relationships, which hold immense long-term value for product development, marketing, and building customer loyalty, especially in an increasingly competitive market. What are the long-term implications of the DTC model for PBMs and the broader pharmaceutical supply chain? - The DTC model is eroding PBMs' traditional central role in drug pricing and distribution, potentially leading to a decline in their market share and profit margins. If more blockbuster drugs shift to DTC, PBMs' business models will face fundamental challenges, forcing them to transform or consolidate. - This will drive a restructuring of the pharmaceutical supply chain, shifting from a multi-layered intermediary model to a more direct manufacturer-to-patient link. Pharmacies' roles may evolve from drug distributors to more of a consulting service or dispensing hub, and their bargaining power will diminish. - In the long run, the DTC model could enhance supply chain efficiency and cost transparency, but it might also introduce new risks of market concentration, where a few large pharmaceutical companies leverage their DTC platforms to gain greater market control. What does the CMS's "punting" on GLP-1 drug coverage signal for the future? - The CMS Administrator's "punting" on GLP-1 drug coverage signals that these medications, due to their high cost and potentially massive market demand, are likely to become a central focus for future Medicare spending and negotiations. - This caution reflects the immense pressure on the federal government to balance patient needs, medical innovation, and fiscal sustainability. Broad coverage of GLP-1 drugs would pose a significant burden on the Medicare budget, especially given current high fiscal deficits. - CMS is likely awaiting more data on GLP-1 drugs' long-term benefits, cost-effectiveness analyses, and alternative treatment options to formulate a more comprehensive coverage strategy in the future, or to use as leverage in upcoming price negotiations.