February 4, 2016

(Washington, D.C.)— Testifying before the House Committee on Oversight and Government Reform, Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt outlined market-based policy solutions to help increase competition and lower prescription drug costs. The Committee is examining “methods and reasoning behind recent drug price increases” at a hearing titled, “Developments in the Prescription Drug Market.”

PCMA is the national association representing America’s pharmacy benefit managers (PBMs). PBMs administer prescription drug plans for more than 266 million Americans who have health insurance from a variety of sponsors including: commercial health plans, self-insured employer plans, union plans, Medicare Part D plans, the Federal Employees Health Benefits Program (FEHBP), state government employee plans, managed Medicaid plans, and others.

PBMs are projected to save employers, unions, government programs, and consumers $654 billion—up to 30 percent—on drug benefit costs over the next decade according to new research. PBMs reduce drug costs by:

  • Negotiating rebates from drug manufacturers.
  • Negotiating discounts from drugstores.
  • Offering more affordable pharmacy channels.
  • Encouraging use of generics and more affordable brand medications.
  • Managing high-cost specialty medications.
  • Reducing waste and improving adherence.

“The pricing tactics discussed today are just one piece of a much larger puzzle. The key to reducing costs is through competition. The challenge is we need more of it,” said PCMA President and CEO Mark Merritt. “There is also a growing use of bait-and-switch copay assistance marketing programs that encourage patients to ignore generics and start on more expensive brand drugs.”

Unlike programs for the poor and uninsured, copay offset programs are designed to encourage insured patients to bypass less expensive drugs for higher cost branded drugs. Such practices are considered illegal kickbacks in federal programs and have long been under scrutiny by the Health and Human Services Office of Inspector General (OIG).

PCMA outlined several potential solutions for high drug prices that policymakers could consider, including:

  • Accelerating FDA approvals of me-too brands against drugs that face no competition.
  • Accelerating FDA approvals of generics to compete with off-patent brands that face no competition.
  • Creating a government “watch list” of all the off-patent brands so potential acquirers are aware that policymakers can monitor these situations.
  • Making copay coupons an illegal kickback for all insurance that receives any federal subsidy.