NACDS Refutes Comments Made by PBM Executives at Congressional Hearing

Published Online: Wednesday, December 14, 2011
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The National Association of Chain Drug Stores submitted comments to US Senator Herb Kohl (D-WI) clarifying statements made by Express Scripts CEO George Paz and Medco CEO David Snow at a recent congressional hearing that it deemed to be misleading.

Senator Kohl, chairman of the US Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, held a hearing on the proposed Express Scripts and Medco merger on December 6, during which Mike Bettiga, RPh, chief operating officer of Shopko Stores Operating Company, provided testimony.

In follow-up comments submitted this week, NACDS emphasized ways in which the PBM executives attempted to downplay the potential harmful impact of the proposed merger.

“We believe that these witnesses obfuscated facts in an effort to portray their companies in a better light, downplaying many of their companies’ objectionable activities that would certainly worsen if the two companies were allowed to merge,” NACDS said in its comments.

The Association questioned Snow’s testimony that every state board of pharmacy and every state insurance commission regulates his firm, and urged Sen. Kohl to explore this assertion further.

“PBMs have generally been successful in opposing efforts at state regulation. Only a couple of states directly regulate the activities of a PBM through a board of pharmacy, and the regulation in those states is weak, at best. As such, boards of pharmacy are limited in their oversight of PBMs,” NACDS stated in its comments.

Snow and Paz also claimed that PBMs do not make any decisions in the design of prescription drug benefits, and that they merely follow the orders of the health plans and providers.

“We believe that these assertions are misleading. PBMs design the benefit plans and determine the costs. Because of that, it is our view PBMs steer the health plans and employers toward the items they most want to sell.”

NACDS asserted that PBMs set prices in a way that pushes orders for products and services that the PBMs want customers to order, and creates disincentives for services and items that the PBMs don’t want their customers to order.

NACDS also questioned several other areas of concern based on Paz’s and Snow’s comments, including the level of savings that PBMs actually achieve and transparency regarding rebates and discounts from manufacturers. This point has taken on tremendous significance amid the controversy surrounding the merger, as consumer groups and elected officials have voiced concern and skepticism that a new mega-PBM would pass along any purported savings to consumers, employers and health plans.

In addition to clarifying the hearing record, NACDS lauded Senator Kohl for his comments during the hearing regarding major employers not expressing their “considerable concerns” about the merger publicly, for fear of retaliation from the PBMs.

“If this merger is allowed to proceed, patients will be faced with reduced access to retail pharmacies and pharmacy services as the combined entity shifts patients to mail order and dominates specialty pharmacy,” NACDS’ comments stated. “We believe that you should consider the testimony of Mr. Paz and Mr. Snow as illustrative of how their respective companies presently conduct themselves, which would only be exacerbated by a merger.”

NACDS also launched the www.TooBigToPlayFair.com website, which provides regular updates on the proposed merger and growing nation-wide opposition to the anti-consumer PBM consolidation.
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