Health Plans Bring Pressure to Bear on Drug Prices

http://www.nytimes.com/2014/06/21/business/health-plans-bring-pressure-to-bear-on-drug-prices.html

In dealing with health plans, drug companies are facing a new imperative — bargain or be banned.

Determined to slow the rapid rise in drug prices, more health plans are refusing to cover certain drugs unless the companies charge less for them.

The strategy appears to be getting pharmaceutical makers to compete on price. Some big-selling products, like the respiratory medicine Advair and the diabetes drug Victoza, have suffered precipitous declines in market share because Express Scripts, the biggest pharmacy benefits manager, recently stopped paying for them for many patients.

“There’s clearly more price competition in the marketplace,” Andrew Witty, chief executive of GlaxoSmithKline, said, talking about Advair in a recent company earnings call.