A new analysis by Matrix Global Advisers (MGA) concludes that placing government mandates on private market contracts between PBMs and employers would significantly harm employers, increase administrative burdens, and reduce plan flexibility. It also finds that many employers will see fewer savings in their prescription drug benefit. Higher costs for employers may also mean higher costs for patients.

The report, authored by Alex Brill, CEO of MGA and former policy director and chief economist for the House Committee on Ways and Means, and Christy Robinson, health policy expert, analyzes Sen. Cassidy’s legislation that will allow the government to dictate contract terms over pharmacy benefits in the private market.

Read the full report HERE. As they explain, the anti-market mandate:

“…Its impact will be felt directly by all employers and plans currently (and, importantly, voluntarily) in alternative financial arrangements with their PBM. Specifically, this mandate would unduly constrain PBM clients by forcing all ERISA-governed health plans to accept one type of contractual arrangement with PBMs when, in fact, employer preferences are heterogeneous.”

Current market data included in the report illustrates this diversity of preferences by employers. While 59% of employers choose arrangements with 100 percent pass-through of rebates, 29% choose arrangements in which the employer receives a share of rebates, and 11% choose flat-dollar arrangements, which involve no employer risk.

“In short, employers are not inclined toward a ‘one size fits all’ arrangement with their PBM and have different preferences for risk sharing.”

The authors caution that the policy could backfire, leading to increased costs for many employers:

“To the extent that it yields better terms for some employers, it is likely to also lead to less generous discounts for other employers, as increased transparency can inhibit PBMs’ ability to offer different discounts to different customers. In essence, this policy has little upside but risks restricting employers’ choices.”

Now is not the time for Congress to take steps that will raise costs for American families and rob employers of their ability to choose a plan that works best for their employees. If the Senate passes the government funding bill with the Cassidy provision included, profits will skyrocket for Big Pharma on the backs of patients and small businesses.