March 29, 2017

A recent article (“The Hidden Monopolies that Raise Drug Prices”) gives an inaccurate and incomplete picture of pharmacy benefit managers (PBMs).

Since the reporter never bothered to contact the Pharmaceutical Care Management Association (PCMA), below are some important points to set the record straight.

  • Typically, PBMs reduce prescription drug costs by 30%. In addition, four recent PBM drug trend reports found that drug trend percentages for 2016 were in the low single digits and about one-third of PBM clients experienced year-over-year declines in drug spending.
  • An overwhelming body of research shows that PBMs are part of the solution to lowering health care costs, including research from the Federal Trade Commission (FTC), the Congressional Budget Office and the Government Accountability Office (GAO).
  • Employers, unions, and government programs all choose to hire a PBM and in the contracting process, demand their desired level of transparency. Their interest in things like “transparency” of price concessions varies widely, as do their resources, goals, and patient populations. These are tough, experienced negotiators who choose exactly the type of contracts, formularies, and transparency levels they want. If one PBM doesn’t give them what they want, another competing PBM surely will.
  • According a recent survey, nine-in-ten employers are satisfied with their existing pharmacy benefits. While reducing prescription drug costs is their top priority, these business leaders are satisfied with the drug benefits they can provide by a 91% to 9% margin. Not surprisingly, then, 95% of these owners and executives are satisfied with the company they’ve hired to that manage their prescription drug benefits.
  • While PBMs support policies that empower these payers to make informed health care purchasing decisions, we oppose so-called “transparency” proposals that would give drug stores and drug makers access to competitive information that would empower them to charge higher prices. The FTC has already explored this issue and concluded that this would increase, not decrease, costs for consumers.
  • The article references legislation that would mandate that pharmacy networks be open to any “drugstore,” but ignores the fact that this would undermine lower cost pharmacy plans that save billions of dollars in Medicare Part D and are a key part of the program’s success. So-called “any willing pharmacy” legislation could risk patients’ safety.
  • Home delivery of prescription drugs lowers prescription drug costs and improves adherence. A Kaiser Permanente analysis found that stroke patients receiving medication through mail-service pharmacies have better adherence than those getting their medication at drugstores.
  • The use of Maximum Allowable Costs lists (MAC) reduces costs for consumers, employers, unions, and government programs. A MAC is simply the maximum amount a health plan will reimburse a pharmacy for a particular generic drug, based on prevailing market conditions.  A Health and Human Services Office of Inspector General (OIG) report noted “the significant value MAC programs have in containing Medicaid drug costs.” The OIG also recommended that states strengthen MAC programs, not weaken them.
  • The GAO has reported that most independent drugstores already hire powerful Pharmacy Service Administrative Organizations (PSAOs) to collectively bargain on their behalf with PBMs and other payers. The contract provisions that PSAOs negotiate include reimbursement rates, payment terms, and audits of pharmacies.
  • In addition, the article paints drugstores under some sort of financial duress. However, data show that the drugstore industry’s profit margins have remained stable and that the average pharmacist owning a single pharmacy earned about $200,000 in 2016.

Pharmaceutical Care Management Association