'That’s What PBMs Do' Tagline Aims To Inspire Support In Drug Pricing Debate
This article was originally published in The Pink Sheet Daily
Executive Summary
Inside-the-Beltway public relations campaign targets policymakers and opinion leaders as employers increasing challenge the PBM business model.
Pharmacy benefit managers are launching a national public relations campaign aimed at promoting the ability of PBMs to reduce drug costs and at protecting the industry from being targeted by policies aimed at combatting high drug prices.
The inside-the-Beltway campaign was launched by the Pharmaceutical Care Management Association March 17. With the tagline “That’s What PBMs Do,” it will include a microsite with a video on PBMs and an interactive map showing state-specific savings from PBM drug-management tools.
It also includes a series of ads highlighting PBM capabilities like managing pharmacy costs for employers and Medicare Part D, “improving safety” through specialty pharmacy, offering mail-order delivery and improving adherence to chronic care medications.
The campaign comes as PBMs are facing increasing skepticism from clients and launched just before the largest PBM, Express Scripts Holding Co., was sued by its largest client, the insurer Anthem Inc. (see related story, (Also see "Pharmacy Benefit Melee: Anthem vs Express Scripts Suit Hinges On Benchmark Pricing" - Pink Sheet, 21 Mar, 2016.)).
“This campaign is focused on educating policymakers and opinion leaders on how PBMs reduce costs, expand access and improve the quality of prescription drug benefits for more than 266 million Americans,” PCMA President and CEO Mark Merritt said in a release.
As part of the effort, PCMA also released a report by research and consulting firm Visante, which includes estimates of PBM-produced savings in Medicare Medicaid and commercial, and a state-by-state breakdown of actual and potential savings generated by PBMs.
For example, the report estimates that “at current/average use, PBM tools will save $654bn compared to low or restricted use over the next decade. … Likewise, $654bn could be lost if PBM tools are limited by government or other factors.”
The report also maintains that “much is at stake, as PBM savings can help employers to preserve tens of thousands of jobs over the next 10 years.” It estimates that annual savings currently generated by PBMs for the commercial sector will cover the cost of more than 670,000 jobs in 2016.
Employers Challenging PBM Model
The appeal to employers comes at a time when a group of 20 large US companies have banded together to develop solutions to contain rising health care costs, with an initial focus on prescription drugs (Also see "Employer Insurance Alliance May Test New PBM Contracting Approaches" - Pink Sheet, 16 Feb, 2016.). The group plans a pilot program on reducing drug costs that may focus on the way employers contract with PBMs.
One issue for consideration may be the fact that although PBMs are focused on reducing drug spending, they also make more money on rebates from biopharmaceutical manufacturers when drug prices are higher, because rebates are calculated as a percentage of a drug’s cost. Fees charged by PBMs can also be calculated as a percentage of a drug’s cost.
PBMs transfer some or all of rebates back to employers, but it’s not always clear to payers how much is involved because of a lack of transparency around PBM contracts with manufacturers. As more and more high-priced specialty drugs reach the market, employers and health plans may take a closer look at the mix of incentives involved in current PBM practices.
Generic Drugs Are Sore Point
Anthem's dispute with Express Scripts appears to focus primarily on generic drugs. The way PBMs reimburse generic drugs has also long been a sore point with retail pharmacies, which have pushed for legislation to limit circumstances in which PBMs can use fixed price schedules known as “maximum allowable cost” when paying for generic drugs.
Pharmacies complain that PBMs are taking advantage of the MAC pricing system to underpay pharmacies and increase the “spread” between what they reimburse the pharmacy and what they charge the payer.