Unaccountable PBMs Predicted to Feel the Heat in 2017

Congress, regulators, and the media expected to place pressure on pharmacy benefit managers in the coming months.

The role played by pharmacy benefit managers (PBMs) in the pharmaceutical marketplace is beginning to face scrutiny. The president and CEO of the Senior Care Pharmacy Coalition (SCPC) predicts that in 2017, PBMs will start to feel the heat as they receive increased scrutiny from Congress, regulators, and the media, according to a press release.

“In 2015 and 2016, PBMs’ façade as benevolent, pro-consumer actors in the pharmaceutical marketplace began to crack—–and this will continue in 2017 as Congress, the regulatory community, and the media direct fresh scrutiny at this anti-competitive oligopoly,” said SCPC President Alan G. Rosenbloom in the release.

A recent CMS report revealed that drug manufacturers and pharmacies are increasingly paying higher rebates to PBMs and insurers. However, instead of the money translating to lower costs for government health care programs and consumers, these middle men are keeping the money, according to the report.

“Since 2010, the growth in rebates or concessions paid by drug companies or pharmacies to PBMs or managed care plans after the point of sale has far outpaced the growth in Part D drug costs—–on both a total and per-member per-month (PMPM) basis,” the release stated.

Between 2010 and 2015, data showed that total direct and indirect remuneration (DIR) growth was approximately 22% per year, and PMPM DIR growth was nearly 14% per year. During the same period, total Part D gross drug costs only grew about 12% per year, and PMPM Part D gross drug costs only grew nearly 5% per year, according to the release.

In regards to PBMs and the long-term care (LTC) pharmacy sector, Rosenbloom said that under Medicare Part D, the PBMs that administer Prescription Drug Plans (PDPs)—–often owned by the PDPs or a shared parent company––use a maximum allowable cost (MAC) pricing formula to create reimbursement rates for most of the generic drugs dispensed by LTC pharmacies to elderly Medicare beneficiaries.

“SCPC argues that data between PBMs and LTC pharmacies find increasing reimbursement inequities for LTC pharmacies driven by these MAC pricing methodologies,” the release stated.

The data revealed that MAC prices paid for the same generic drugs on the same day by different payers significantly varied, raising questions about the relationship between price variation and actual market conditions, according to the SCPC.

“Congress used the SCPC report in 2016 to question PBMs about their pricing practices, and we are just beginning to see mounting evidence of how PBMs and their anti-competitive pricing policies in the LTC pharmacy are costing Medicare more,” Rosenbloom concluded.