December 11, 2018

(Washington, D.C.) — The Pennsylvania Auditor General’s report on Medicaid and pharmacy benefit managers (PBMs) is undermined by failing to note a simple, but key critical element: PBMs are reducing prescription drug costs and increasing access to needed treatments for the state’s most vulnerable population, the Pharmaceutical Care Management Association (PCMA) said today.

“The Pennsylvania Auditor General’s report unfortunately is highly biased toward one special interest, the independent drugstore lobby. The report omits any mention of how PBMs are reducing prescription drugs costs and increasing access to needed medications for Pennsylvania’s Medicaid beneficiaries,” said PCMA President and CEO JC Scott. 

The following points set the record straight for each issue the report inaccurately discussed.

Setting the Record Straight on Transparency

  • Employers, unions, and government programs choose to hire a PBM and in the contracting process can demand their desired level of transparency. PBM clients are experienced negotiators who choose exactly the type of contracts, formularies, and transparency levels that meet the needs of their patient populations and business models. If one PBM doesn’t give them what they want, another competing PBM surely will.
  • PBMs support transparency that offers consumers and plan sponsors the information they need to make the choices that are right for them. However, giving drug companies and drugstores pricing information that could help them tacitly collude with their competitors is a mandate that the Federal Trade Commission and economists say will raise costs.
  • PBM clients regularly audit their contracts, including the terms involving drug manufacturer rebates and independent pharmacy reimbursements, to ensure compliance with the law and the contract. In Pennsylvania’s Medicaid program, all rebates are passed through to the client.

Setting the Record Straight on Oversight of PBMs

  • In 2016, Pennsylvania enacted HB 946 giving the state’s Department of Insurance oversight over PBMs and new protections for independent pharmacies during PBM audits.
  • In Medicaid, federal and state laws are in place to regulate PBMs and managed care organizations.

Setting the Record Straight on Independent Pharmacy Reimbursements

  • PBMs are hired to reduce prescription drug costs while increasing access to medications, including for Pennsylvania’s most vulnerable population in the Medicaid program.
  • Between 2010 and 2017, the number of independent retail pharmacies in Pennsylvania grew from 932 to 1,077, an increase of 15.5%. Nationally, the number of independents grew 12% over the same period, while the number of chain retail pharmacies decreased 2.3%.
  • 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.

See PCMA’s Letter to Auditor General Eugene A. DePasquale