PBMs Face New Criticism From Old and New Foes

As Congress considers drug pricing reform legislation, a new survey commissioned by a longstanding antagonist of the industry points to pharmacy benefit mangers (PBMs) as the source of the problem.

Eighty percent of voters are concerned that PBMs steer patients to pharmacies they own or control to maximize their own profit, according to a new National Community Pharmacists Association (NCPA) poll conducted by Morning Consult. The same proportion also believe that PBMs keep all or most of the discounts on drugs they negotiate instead of passing the savings on to consumers, according to the association, which has been among the most vocal critics of PBMs.

are concerned that just three PBMs control 80% of the prescription drug market, and 76% of voters said they don't like that PBMs “overcharge employer and taxpayer-funded programs for drugs and pocket the difference,” NCPA said.

"The numbers are staggering. Large majorities of Republicans, Democrats, and independents are concerned by the PBMs' self-serving and anti-competitive practices, “said B. Douglas Hoey, CEO of NCPA, in a statement.

The Pharmaceutical Care Management Association, the trade association which represents the industry, did not respond to a request for comment on the survey.

The PBM industry is facing an onslaught of political and legislative challenges these days. Beyond traditional foes such as NCPA, there are groups such as the PBM Accountability Project, a coalition of groups that are critical of the industry that includes NCPA, the National Consumers League, the Union of Bricklayers and Allied Craftworkers and the Coalition of State Rheumatology Organizations. The group is urging Congress to require PBMs to provide complete data transparency and break the link between drug prices and PBM revenues. “PBMs can earn money only from a single, flat administrative fee for services they provide, but PBMs may not earn any revenues from manipulating prescription drug prices or imposing charges that are greater than PBMs’ own net cost of acquisition,” the organization said.

The accountability project and 40 organizations, including pharmacy, patient and labor groups sent a letter to members of Congress on PBM pricing reform in April.

“Fortunately, Congress has an historic opportunity, right now, to make corrections to the prescription drug market that will eliminate the perverse incentives PBMs currently have to raise, rather than lower, prices of prescription medicines,” said Mark Blum, managing director of the PBM Accountability Project.

Two of the federal PBM legislative efforts underway are the Pharmacy Benefit Manager Reform Act and the Pharmacy Benefit Manager Transparency Act (S.127), which a Senate Committee sent to the full Senate in late March. Introduced in January by Sens. Maria Cantwell (D-Wash.), chair of the Commerce Committee, and Chuck Grassley (R-Iowa), the bill aims to increase transparency in prescription drug pricing.

According to a preliminary estimate by the Congressional Budget Office, the legislation would reduce the deficit by $740 million over the next 10 years.

Meanwhile, the Senate Health, Education, Labor & Pensions (HELP) Committee recently marked up the Pharmacy Benefit Manger Reform Act, a move criticized by PCMA.

“Just one day after examining the pricing power drug companies use to block competition, the HELP Committee took drug companies’ bait and wrongly blamed the one actor in the supply working to reduce drug costs,” PCMA said. “The committee advanced legislation, without allowing common sense amendments, that would increase prescription drug costs.”

The legislation would create a “one-size-fits-all contracting mandate that ignores the unique needs of patients and removes employer choice,” PCMA added. “Real solutions to existing gaps in prescription drug affordability could easily be included in a drug pricing bill that actually lowers costs.”