CBO Contradicts PBMs on Transparency

By Devin Stone

NCPA has consistently been a champion of transparency measures for pharmacy benefit managers (PBMs), because such legislation is necessary to reduce the incentive for PBMs to engage in actions that are detrimental to plan sponsors, patients, and community pharmacies.

The voices of community pharmacies and consumer groups have been effective to date as both the House and Senate health care reform bills include PBM transparency provisions. Both bills require the PBM to disclose to the health plan all revenue they receive from pharmaceutical manufacturers, generic dispensing rates via mail order and retail pharmacies, as well as information that can be used to gauge the amount of spread pricing practiced by the PBM (i.e., paying the community pharmacy one price for dispensing the drug while billing the health plan much more).

Each of these three metrics will provide the health plan with the data necessary to better evaluate their contracts to make sure they are getting the best possible ‘deal’ from their PBM. In fact, many large private health plans are already using their leverage to negotiate contracts with PBMs that contain such transparency provisions, and have since seen substantial savings.

Interestingly enough, the PBMs’ top lobby shop has officially stated that “America’s pharmacy benefit managers (PBMs) believe strongly in the principle of transparency and empowering payers to make informed health-care purchasing decisions.” However, they oppose the transparency provisions in both the House and Senate bills and have mischaracterized them. In their words, the transparency measures in both the House and Senate bills would:

“force de facto public disclosure of sensitive drug-pricing information, resulting in drug manufacturers being made aware of their competitors’ negotiating strategies.”

For anyone whom has actually read the legislation, they would know that both the House version (see pages 123 – 126), the Senate version (see page 1,567), as well as the 2009 version of the Cantwell Amendment require that all information disclosed by the PBM be treated as confidential and therefore not for public consumption. In other words, the main criticism from the PBMs’ top lobbying organization is that manufacturers will somehow use information which they will by definition not have access to in order to raise prices.

Last Thursday the Congressional Budget Office scored the transparency provisions in the Senate Health Care Reform Bill, the Patient Protection and Affordable Care Act. Despite the rhetoric of PBMs, the non-partisan CBO deemed PBM transparency to be budget neutral. Transparency will not cost the taxpayer anything.

Indeed, the experiences of many public and private health plans have demonstrated that substantial savings can occur after reining in their PBM. The Pentagon expects savings of $1.67 billion in its TRICARE program. The States of New Jersey and Texas project reducing health care costs by hundreds of millions of dollars through transparency. These and other examples of savings from PBM transparency can be found here.

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