It’s time to eliminate the secretive Pharmacy Benefit Manager pricing practices

With federal lawmakers introducing a variety of bipartisan, bicameral legislation throughout 2017 aimed at eliminating opaque and secretive Pharmacy Benefit Manager (PBM) pricing practices, the increasingly controversial middlemen in the national drug pricing chain now find themselves the target of new state laws passed to end so-called “clawbacks,” which retroactively extract dollars from consumers months after a transaction.

A new state law signed by Connecticut Governor Dan Malloy (D) would close a drug price loophole taking aim at PBM clawbacks — referred to technically as Direct and Indirect Remuneration (DIR) fees.

The law protects consumers by eliminating retroactive fees PBMs impose on patients, a variety of pharmacy groups — including long term care (LTC) pharmacies — and the Medicare program itself.

Connecticut, Louisiana, Georgia, North Dakota and Maine are among more than a dozen states nationally, which have either passed legislation aimed at stopping clawbacks — or seek to do so — amid growing concern about high prescription costs and the escalating national debate over drug prices.

Meanwhile, ABC News aired a recent report on the landslide of PBM lawsuits, detailing how the middlemen benefit at consumers’ expense from secretive, undisclosed pricing agreements.

Clawbacks levied retroactively on LTC pharmacies serving vulnerable seniors are both abusive and contribute to pharmaceutical pricing volatility. We thank Congressman Doug Collins (R-GA) for championing the cause of eliminating PBM clawbacks, and articulately detailing the need to eliminate a variety of anti-free market PBM abuses.

This fall, advancing the bicameral Improving Transparency and Accuracy in Medicare Part D Drug Spending Act is an SCPC priority. Introduced by Sens. Shelley Moore Capito (R-W.Va.) and Jon Tester (D-Mont.) in the Senate, and Reps. Morgan Griffith (R-Va.) and Peter Welch (D-Vt.) in the U.S. House (H.R. 1038), the bill will stop PBMs from extracting retroactive DIR fees in transactions with patients, LTC pharmacies and the Medicare program.

Express Scripts, CVS Caremark and Optum Rx are, for all intent and purpose, a PBM oligopoly, controlling more than 80 percent of prescription medications dispensed to patients in long-term care facilities.

In their current Capitol Hill advocacy efforts they conveniently omit discussing a seminal January, 2017 Centers for Medicare & Medicaid Services (CMS) report finding that while drug companies and pharmacies are paying larger rebates to PBMs, these “benefit managers” simply keep the money rather than translating it into lower costs for government health care programs or beneficiaries.

CMS data finds that since 2010, the growth in rebates or concessions paid by drug companies or pharmacies to PBMs or managed care plans (in addition to the lump sum payment plans received from Medicare) after the point of sale (DIR fees) has far outpaced the growth in Part D drug costs. CMS reports DIR fees increased from $31 billion in 2012 to $50 billion in 2015.

At a time when transparency in the marketplace, in government and within society at-large is a driving force for positive change benefitting every American, the PBM industry’s reliance upon hiding facts, and making secret deals behind closed doors, will and should be a target for lawmaker, regulator and media scrutiny alike.

Alan G. Rosenbloom is President of the Senior Care Pharmacy Coalition (SCPC) in Washington, D.C. Representing a national membership serving more than 675,000 seniors daily, SCPC is the only federal advocacy organization devoted exclusively to the interests on the nation’s LTC pharmacies and the patients they serve.