Third-party Resources and Information

What the Research Says About PBMs’ Value to the Health Care System

Federal Trade Commission (FTC)-Department of Justice (DOJ): A July 2004 analysis by the FTC and the Antitrust Division of DOJ concluded that the pharmacy benefit management industry is a competitive and diverse marketplace that is driving cost savings and quality improvements for health care consumers and purchasers and suggested that competition—not further government regulation—is the better avenue to ensuring appropriate PBM disclosure and transparency.  Click here to read the analysis.

Congressional Budget Office (CBO): The non-partisan CBO estimated that PBMs have the potential to save as much as 30 percent in total drug spending relative to unmanaged purchases of prescription drugs where PBMs can use their full range of price discounts and rebates, utilization control tools, and other tools for encouraging appropriate utilization.  Click here to read the CBO report.

Mail-Service Pharmacy

Federal Trade Commission (FTC): During the debate leading up to the passage of the Medicare Modernization Act of 2003, the independent drugstore lobby sought to convince Congress that the use of PBM-owned mail-order pharmacies could result in higher costs.  In response to these allegations, the FTC was charged with answering a number of very specific questions about the effects that PBM ownership of a mail-order pharmacy can have on overall prescription drug costs.  The results of the FTC report were released in August 2005.  The FTC determined that allegations of PBMs’ conflict of interest were “without merit, and that PBM-owned mail-order pharmacies:

• Offer lower prices on prescription drugs than retail pharmacies and non-PBM owned mail pharmacies;
• Are very effective at capitalizing on opportunities to dispense generic medications; and
• Have incentives closely aligned with their customers: the third-party payors who fund prescription drug care.

Click here to read the FTC report.

Government Accounting Office (GAO): The GAO has examined the value provided by PBMs participating in the federal employees’ health plan.  For prescription drugs dispensed through mail-order pharmacies, the average mail-order price was about 27 percent below the average cash-price paid by consumers for a brand name at a retail pharmacy and 53 percent below the average cash-price paid for generic drugs.  For drugs dispensed at the retail pharmacy counter, PBMs negotiated discounts of 18 percent below what consumers would pay in cash at a retail pharmacy counter for 14 brand name drugs and 47 percent below what consumers would pay for 4 select generic drugs.  Click here to read the GAO report.

Pharmacotherapy: Official Journal of the American College of Clinical Pharmacy: Peer-reviewed data found that highly automated mail-service pharmacies dispensed prescriptions with 23 times greater accuracy than retail pharmacies. The mail-service error rate was zero in several of the most critical areas, including dispensing the correct drug, dosage, and dosage form.

Click here to read report abstract.

American Journal of Managed Care: Consumers receiving their prescription medications for chronic conditions through a mail-service pharmacy “were more likely to take them as prescribed by their doctors than did patients who obtained them from a local pharmacy.” Key findings from the study include:

• Mail-order pharmacy users were more likely than local pharmacy users to have a financial incentive to fill their prescriptions by mail (49.6 percent vs. 23.0 percent), and to live a greater distance away from a local pharmacy (8.0 miles vs. 6.7 miles).
• 84.7 percent of patients who received their medications by mail at least two-thirds of the time stuck to their physician-prescribed regimen, versus 76.9 percent who picked up their medications at "brick and mortar" Kaiser Permanente pharmacies.

Click here to read the study.

Generic Medications

IMS Health: The American health care system saved more than $824 billion through the use of generic medicines over the last decade, according to a study released by the Generic Pharmaceutical Association (GPhA) and IMS Health.  Tools pioneered by pharmacy benefit managers (PBMs) – including encouraging the use of generic medications – have lowered costs and expanded access to prescription drugs for consumers and payers.

Click here to read the report.

Congressional Budget Office (CBO): CBO found that the use of generic medications rather than brand-name medications in Medicare Part D saved beneficiaries and the program about $33 billion in 2007, while an additional $14 billion in savings is expected as first-time generics enter the market through 2012.

Click here to read the CBO report.

Medicaid

The National Center for Policy Analysis (NCPA) White paper: “Increasing the Cost-Effectiveness of Medicaid Drug Programs.” Transitioning to a more efficient and affordable pharmacy benefit model would save states across the country billions without limiting access, according to NCPA.  Savings strategies include: Increasing utilization of generic drugs; negotiating competitive dispensing fees; improving drug utilization controls; and negotiating discounts and reimbursements with drug manufacturers similar to commercial sector.

Click here to read NCPA white paper.

The Lewin Group: Potential Federal and State-by-State Savings if Medicaid Pharmacy Programs Were Optimally Managed . States and the federal government could save $33 billion over the next decade by modernizing pharmacy benefits to be more like those in Medicare and commercial plans.

Click here to read report.

American Enterprise Institute: “Tampering with Part D Will Not Solve Our Debt Crisis”

Click here to read report.