June 3, 2019

(Washington, D.C.) — The Pharmaceutical Care Management Association (PCMA) released the following statement on the New York Senate Investigations and Government Operations Committee’s report on pharmacy benefit managers (PBMs).

“This report attempts to undermine the only industry that is reducing prescription drug costs for New York’s employers and consumers,” said PCMA President and CEO JC Scott. “The truth is PBMs advocate for consumers and health plan sponsors to keep prescription drugs accessible and affordable. In fact, in New York PBMs will save $39.9 billion across all the state’s health programs over 10 years.”

The following points set the record straight for several issues raised in the report.

Setting the Record Straight on Transparency

  • PBMs support and practice transparency that empowers patients, their providers, health plan sponsors, and policymakers to make informed decision-making that can lead to lower prescription drug costs.

Setting the Record Straight on PBM-Negotiated Rebates

  • PBMs have been able to achieve an overall low cost trend for prescription drugs by encouraging competition among drugmakers and drugstores.
  • Drug manufacturers alone set drug prices. Once those prices are set, PBMs negotiate rebates – a key tool to reduce prescription drug costs for consumers – with drug manufacturers. These savings are used by plan sponsors to maintain lower premiums for all consumers in a health plan, to keep down the cost that consumers pay at the counter, or a combination of both.
  • Independent research shows that for every $100 spent in the supply chain on branded drugs, PBMs retain about two dollars, compared with $58 for manufacturers. Other research shows that after PBM-negotiated price concessions, plan sponsors and consumers save on average $123 per brand prescription.

Setting the Record Straight on Independent Pharmacy Reimbursements

  • A Government Accountability Office report shows that independent drugstores already hire powerful Pharmacy Service Administrative Organizations (PSAOs) to collectively bargain on their behalf with PBMs. The contract provisions that PSAOs negotiate include reimbursement rates, payment terms, and audits of pharmacies.
  • Contrary to the report’s assertion, in New York the number of independent pharmacies is increasing. Between 2010 and 2019, the independent pharmacies in New York grew from 2,185 to 2,813.

Setting the Record Straight on Spread Pricing

  • Employers, insurers, and other plan sponsors are best positioned to choose how to structure the coverage they provide for their enrollees. The concept of spread pricing is not unique to PBM contracts.

Setting the Record Straight on Maximum Allowable Costs (MAC)

  • A MAC is simply the maximum amount a health plan will reimburse a pharmacy for a generic drug, based on prevailing market conditions. Forty-five state Medicaid programs use MAC lists to reduce costs.
  • The Health and Human Services Office of Inspector General (OIG) touted “the significant value MAC programs have in containing Medicaid drug costs.”
  • white paper authored by a former special counsel at the Federal Trade Commission notes that “legislative or regulatory measures that limit, restrict, or interfere with MACs are likely to have several unintended adverse consequences,” including higher prices and tacit collusion among pharmacies.

We believe that more can be done to address rising drug prices. We stand ready to work with New York lawmakers to increase competition and build on market-based tools in public programs and private health insurance.