NCPA Urges More Transparency from Pharmacy Benefit Managers

August 21, 2014

PRESS RELEASE

Washington, DC (August 20, 2014) —The National Community Pharmacists Association (NCPA) today urged a key advisory panel to require pharmacy benefit managers (PBMs) to be more forthcoming about their assorted fees and revenue streams with ERISA health plan sponsors that employ them. NCPA offered several pro-patient, pro-transparency recommendations at a hearing of the ERISA Advisory Council, which advises the U.S. Department of Labor.

“Most health plan sponsors and fiduciaries have very little knowledge of the breadth of PBM revenue streams and the ins and outs of PBM contracting and auditing,” testified NCPA Vice President for Policy & Regulatory Affairs Susan Pilch. “We feel that knowledge of this type is critical for plan sponsors and fiduciaries that are responsible for safeguarding the assets of a plan and protecting the rights of the beneficiaries.”

The NCPA testimony includes the following recommendations:'

1) Extend to PBMs the disclosure requirements already applied to vendors of pension plans, such as 401k retirement programs. In addition, include PBM-specific language to address the full range of PBM compensation revenue streams, such as drug rebates and spread pricing.'

2) Require PBMs to disclose to plan fiduciaries the same aggregated information that is currently required of PBMs in state health insurance exchanges as well as in Medicare drug plans (or “Part D”). At the urging of NCPA and others, these bipartisan PBM transparency requirements were incorporated into the Affordable Care Act.'

3) Ensure that plan sponsors and ERISA fiduciaries can conduct an effective audit of their PBM. Specifically, restrict PBMs’ ability to water down audits by selecting an auditor; limiting the audit’s scope, restricting the auditor from sharing findings with the plan sponsor; and preventing the recovery by the plan sponsor of funds obtained through pharmacy audits.

“If plan sponsors or fiduciaries have a clearer picture about the amount of money that is being made by their vendor by virtue of handling the plan’s business — this may provide them with a greater ability to negotiate competitive contracts with these vendors in the first place,” Pilch added.

NCPA previously testified at a December 2010 hearing of the ERISA Advisory Council and addressed similar points.

###

The National Community Pharmacists Association (NCPA®) represents the interests of America's community pharmacists, including the owners of more than 23,000 independent community pharmacies. Together they represent an $88.7 billion health care marketplace, dispense nearly 40% of all retail prescriptions, and employ more than 300,000 individuals, including over 62,000 pharmacists. To learn more, go to www.ncpanet.org, visit facebook.com/commpharmacy, or follow NCPA on Twitter @Commpharmacy.