August 31, 2011
(Washington, DC)—As the Joint Select Committee on Deficit Reduction examines options to reduce the deficit by $1.5 trillion over the next ten years, the Pharmaceutical Care Management Association (PCMA) outlined in a letter to the committee opportunities to leverage greater use of pharmacy benefit management tools to save more than $100 billion in prescription drug costs over that same time period.
“Everyone in the pharmacy community: drugstores, pharmacy benefit managers, drug companies, drug wholesalers, and others have a responsibility to offer cost-saving solutions to this committee,” said PCMA President and CEO Mark Merritt. “The solutions we outline would save more than $100 billion, improve prescription drug benefits, and increase access to these benefits.”
Using innovative cost-saving tools and technologies, PBMs have worked closely with payers in designing drug benefits that lower costs and expand access to prescription drugs. These tools – including pharmacy networks, home delivery, utilization management (such as step therapy and prior authorization), and formularies – help make prescription drug benefits more affordable.
Below are options PCMA recommended to the Joint Select Committee:
- Modernize Medicaid Pharmacy. Over the next decade, the federal government could save $21 billion – without cutting benefits or payments to doctors and hospitals – by modernizing Medicaid pharmacy benefits. Currently, the program uses fewer generic drugs and pays drugstores more than double the dispensing fees that Medicare or private insurers pay.
- Maximize Generic and Therapeutic Substitution in Part D. Fully realize the potential savings available as outlined by the Congressional Budget Office to increase generic and therapeutic interchange opportunities in Part D by shifting spending from the most expensive single source drugs to equally effective lower cost options.
- Expedite the Approval of Biogenerics. Increase competition for biologic drugs by reducing the number of years a drug company has “exclusivity” or monopoly pricing power. As the number and costs of these expensive biologic drugs drastically increases, so does the urgency to begin the approval pathway for biogenerics as quickly as possible.
- Allow Part D Plans to Negotiate Greater Discounts on All Drugs. Increase price competition among brand drug manufacturers by removing the mandate that “all or substantially all” drugs in six protected classes be covered. Manufacturers with a guarantee that their drug is covered have no incentive to offer a discount to Part D plans or beneficiaries.
- Ban a Tax Deduction for Direct-to-Consumer (DTC) Drug Advertising. DTC drug advertising is a key tool used by brand drug manufacturers to drive consumers to take brand medications and the costs of this advertising are tax deductible. While the First Amendment allows for such advertising, it does not require tax payers to subsidize promoting the most expensive drug treatments.
- Encourage Chronic Care Pharmacy and Home Delivery. Currently, due to restrictions in Medicare Part D, beneficiaries in private-sector retiree plans use home delivery four times more often than those in Part D plans. Home delivery is popular with patients because it offers less expensive 90-day prescriptions and is more convenient than driving to the drugstore. With mail-service pharmacies, patients can get private counseling over the phone from trained pharmacists seven days a week, 24 hours a day. Removing Medicare’s restrictions on home delivery and encouraging beneficiaries to get their maintenance medications by mail could improve drug adherence and save Medicare hospital and physician costs.
- Ban Pay-for-Delay Drug Settlements. Currently, brand drug companies are making deals with generics to delay offering a competing generic, allowing the more expensive brand drug to stay on the market for a longer period of time, resulting in higher costs. Prohibiting pay-for-delay agreements would facilitate quicker access to lower-cost generics.