November 17, 2015

(Washington D.C.)—As the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law examines competition “in the pharmacy benefit managers and pharmacy marketplaces,” policymakers should examine how greater use of pharmacy benefit management tools lower prescription drug costs, enhances access and improves quality for more than 253 million Americans who have health coverage through employers, unions, Medicare Part D, the Federal Employees Health Benefits Program (FEHBP), state government employee plans, Medicaid, and others, the Pharmaceutical Care Management Association (PCMA) said today.

PBMs typically reduce drug benefit costs by 30 percent by encouraging the use of generics, negotiating discounts from manufacturers and drugstores, saving money with home delivery, and using health information technology to reduce waste and improve patient safety.

“PBMs reduce costs, expand access, and improve the quality of health benefits,” said PCMA President and CEO Mark Merritt. “Policymakers should guard against special interest hand-outs to the drugstore lobby that undermine affordable pharmacy networks, formularies, and other tools that make prescription drugs more affordable.”

The independent drugstore lobby wants Congress to pursue so-called “any willing pharmacy” mandates (H.R. 793/S. 1190) that would threaten the existence of popular preferred pharmacy plans in Medicare and increase spending by $21 billion over 10 years, according to research from The Moran Company examining the same bill introduced last year.

Research and polling highlight the value of preferred pharmacies in Medicare, including:

  • A survey of seniors in preferred pharmacy plans shows that nine out of 10 seniors from urban, suburban, small town and rural areas have convenient access to these preferred pharmacies in Part D.
  • An analysis of CMS Part D 2015 enrollment data found that 81 percent of seniors chose preferred pharmacy plans that offer convenient access and extra discounts at certain pharmacies.
  • Last year, the Federal Trade Commission (FTC) wrote a letter to Centers for Medicare and Medicaid Services (CMS) on “any willing pharmacy” provisions included in the agency’s proposed Medicare Part D rule and warned that: “The proposed any willing pharmacy provisions threaten the effectiveness of selective contracting with pharmacies as a tool for lowering costs. Requiring prescription drug plans to contract with any willing pharmacy would reduce the ability of plans to obtain price discounts based on the prospect of increased patient volume and thus impair the ability of prescription drug plans to negotiate the best prices with pharmacies.”
  • An actuarial study from Milliman finds that preferred pharmacies will reduce federal Medicare Part D costs up to $9.3 billion during the next 10 years.

Another mandate championed by the drugstore lobby (HR 244) would gut a key cost-control tool—the use of Maximum Allowable Cost (MAC) lists—which ensure payers aren’t overpaying drugstores for generic drugs.

These lists are widely used by health plans to reduce costs for private-sector clients, union health and welfare funds, Medicaid and Medicare Part D. Forty-five state Medicaid programs now use MAC lists, up from 26 states in 1999. A MAC is simply the maximum amount a health plan will reimburse a pharmacy for a particular generic drug, based on prevailing market conditions. In contract negotiations, drugstores agree to accept the drug plan’s MACs (along with dispensing fees) as reimbursement for generic prescriptions.

The Health and Human Services Office of Inspector General (OIG) touted “the significant value MAC programs have in containing Medicaid drug costs.” The OIG also recommended that states strengthen MAC programs, not weaken them. Likewise, another white paper noted that “legislative or regulatory measures that limit, restrict, or interfere with MACs are likely to have several unintended adverse consequences,” including higher prices and tacit collusion among pharmacies.

The independent drugstore lobby’s argument for new mandates is undermined by their own research. According to a Drug Channels analysis of the 2015 National Community Pharmacists Association (NCPA) Digest, the number of independent pharmacies continues to hold steady and profit margins remain stable.