New Report Urges More Transparency into PBM Corporations

A new report by a leading health care policy consulting firm describes the large and expanding role of pharmacy benefit management (PBM) corporations and explores areas that stakeholders have identified as needing greater oversight of and disclosure by these entities.

Applied Policy, L.L.C. examined the influence of PBM corporations at the request of the National Community Pharmacists Association (NCPA). The resulting report, "Concerns Regarding the Pharmacy Benefit Management Industry," provides an overview of three legislative and regulatory concerns that legislators, policymakers, customers, and pharmacies have raised regarding the PBM industry. The House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law is scheduled to hold a hearingNov. 17 entitled "The State of Competition in the Pharmacy Benefit Manager and Pharmacy Marketplaces" at which NCPA PresidentBrad Arthur, RPh, is expected to testify.

The Applied Policy analysis, available online, centers specifically on the following:

• The importance of accuracy and transparency in PBM revenue streams – "PBM customers and pharmacy owners have complained that there is a lack of transparency in these revenue streams that make it difficult to know exactly how much revenue a PBM is generating, and whether or not that revenue is being shared in accordance with contract terms."
• Potential conflicts of interest with PBM-owned mail-order and specialty pharmacies – "[W]hen a PBM both owns a mail order pharmacy, and is responsible for building a retail pharmacy network, the PBM is responsible for negotiating contracts with entities that are competitors to the PBM's mail order pharmacy."
• Unclear generic drug pricing and maximum allowable cost payment calculations – "While MAC list pricing is not the genesis of, nor the solution to, price volatility in the generic market, providing updated MAC prices in advance of reimbursement, in a timely manner, can help to avoid situations in which a pharmacy is under-reimbursed for a prescription due to large fluctuations in price."

"These issues are critical for policymakers and legislators to understand as they consider whether additional oversight of the PBM industry is warranted," the authors wrote, citing the growing influence of PBM corporations even as that industry continues to consolidate into fewer options for health plan sponsors. "As the profile of the PBM industry has risen over the past decade, it has become increasingly important that policymakers fully understand the role that PBMs play in the prescription drug supply chain."

In addition, Applied Policy notes that there are no federal laws or regulations specific to PBM corporations. In the states PBMs face only a patchwork of state laws of varying scope and level of enforcement.

The report concludes that, "Transparency regarding the PBM industry is needed so that purchasers of these services in both in the commercial and government sectors can make well-informed decisions."

"At a time when those from both sides of the political aisle are pressing for substantially more transparency in health care, large PBM corporations should not go overlooked," NCPA CEO B. Douglas Hoey, RPh, MBA. "We appreciate the thoughtful and comprehensive look that this report takes at a range of issues relevant to payers, policymakers, patients and independent community pharmacists. Hopefully this resource will contribute to a more informed discussion among government officials about how to ensure proper transparency into and oversight of PBM corporations."

The National Community Pharmacists Association (NCPA®) represents the interests of America's community pharmacists, including the owners of more than 22,000 independent community pharmacies. Together they represent an $81.4 billion health care marketplace and employ more than 314,000 individuals on a full or part-time basis. To learn more, go to www.ncpanet.org, visitfacebook.com/commpharmacy, or follow NCPA on Twitter @Commpharmacy.