Pharmacy benefit management strategies result in more competition, lower costs, asserts PCMA president

Pharmacy benefit managers (PBMs) are proven in helping to control rising prescription drug prices and should be part of the solutions adopted by policymakers, writes Pharmaceutical Care Management Association (PCMA) President Mark Merritt in an op-ed published yesterday in The Hill.

Amidst the “political storm” over rising drug prices, some “drug companies have chosen to dodge questions on their own pricing strategies by pointing fingers at the pharmacy benefit managers (PBMs) which employers, health plans, unions and government programs hire to negotiate discounts from manufacturers and others in the drug supply chain,” writes Merritt.

“This is a diversionary tactic designed to confuse the media and lawmakers about how pharmacy coverage works.”

According to Merritt, the 1990s ushered in greater demand for a wide array of pharmacy benefit management strategies to help control drug costs, including promoting generics and more affordable brand options, 90-day home delivery and “other consumer-friendly, cost-savings tools.”

He also notes that Medicare Part D has taken advantage of many of these PBM tools, citing a recent study showing “PBMs are on track to reduce prescription drug coverage costs by $654 billion over the next decade for government and commercial payers.”

This success, Merritt writes, has engendered some displeasure with PBMs by drug manufacturers, since “much of the savings” generated by PBMs “is the result of aggressive negotiations with drugmakers.”

“As political scrutiny on drug pricing increased over the past year,” writes Merritt. “The drug industry has responded by trying to convince lawmakers there’s not actually a ‘pricing problem’ but a 'coverage problem.'”

Merritt pushes back on this argument, first noting that PBMs’ aggressive negotiations with drug manufacturers result in lower, not higher costs.

He also notes drug company criticism of health plans for “not using the manufacturer rebates to cover any cost-sharing expenses for each drug as it is dispensed at the pharmacy counter.”

“This is disingenuous and unworkable since manufacturers don’t pay individual rebates on drugs when consumers purchase them,” writes Merritt. “They pay rebates en masse, months afterward, once they’ve accounted for the total sales of the previous quarter or year. That’s why most health plans use rebates to reduce premiums and cost sharing for all enrollees, not just those who take a particular drug.”

Merritt concludes his op-ed by writing the “best antidote to higher prices is more competition.”

“The FDA could facilitate this by approving generics, brands and biosimilar competitors faster so they could get to market more quickly,” he writes. “Prices for hepatitis C drugs were nearly cut in half when new brand competitors entered the marketplace. In fact, a recent IMS Health report concluded that PBMs negotiated larger discounts on these products than most of the price-controlled nations in Europe.”

PCMA is the association representing this country’s pharmacy benefit management companies, which include UnitedHealth Group, ExpressScripts, Aetna, Cigna, CVS Health, Humana and Prime Therapeutics.