Testifying today before the U.S. Senate Committee on Health, Education, Labor & Pensions (HELP), Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt outlined how pharmacy benefit managers (PBMs) reduce prescription drug costs for consumers, employers, unions, and government programs.

PBMs typically reduce prescription drug costs by 30% by using their substantial scale and expertise to promote generics and negotiate aggressive rebates, discounts, and other price concessions with drug manufacturers to reduce premiums and cost-sharing. As a result, PBMs have played a key role in restraining the rise of overall drug costs to low single-digit increases over the past few years.

“Drugmakers set and raise prices regardless of rebates they negotiate with PBMs.  In fact, many high-priced drugs like Sovaldi, which initially cost $84,000, involved no rebates until other competitors came to market,” said PCMA President and CEO Mark Merritt. “Prescription drug prices and price increases are determined by the same supply-and-demand dynamics of countless other industries that manufacture products and use supply chains to get them to market.”

PCMA supports policies to lower drug costs through increased competition. The common-sense policy proposals outlined below are designed to help increase competition:

  • Stop anticompetitive product adjustments, i.e., “evergreening.”
  • Allow for FDA accelerated approval of brand drugs based on increasing competition.
  • Revisit and improve biosimilar labeling and naming.
  • Reduce innovator biologic exclusivity to seven years.
  • Eliminate use of Risk Evaluation and Mitigation Strategies (REMS) to delay competition.
  • Create a safe harbor for value-based drug price negotiations from Medicaid Best Price.
  • Expand drug coverage options for Health Savings Account (HSA)-eligible high-deductible health plans (HDHPs).
  • Remove Part D’s protected classes.
  • Make biosimilars subject to the 50% Part D coverage gap discount.
  • Encourage greater use of generics for Medicare Part D Low Income Subsidy (LIS) enrollees.
  • Eliminate the tax deduction for direct-to-consumer (DTC) drug ads that mention a specific product.

Read PCMA’s testimony here