NCPA Applauds Senate Committee's Vote to Reduce Health Care Costs By Approving Transparency Requirements for Pharmacy Benefit Managers Approval of Sen. Cantwell Amendment Reflects Nationwide Movement to Reduce the PBM Premium

Alexandria, Va. - September 25, 2009

The National Community Pharmacists Association (NCPA) today commended the U.S. Senate Finance Committee for approving by unanimous, voice vote an amendment by U.S. Sen. Maria Cantwell (D-WA) to lower health care costs through common-sense disclosure requirements for any pharmacy benefit manager (PBM) participating in the health insurance exchanges envisioned in Chairman Max Baucus' (D-MT) America's Healthy Future Act.

"PBMs routinely gobble up significant shares of nearly every prescription drug transaction, passing the costs on to patients and plan sponsors often left in the dark as premiums increase," said Bruce T. Roberts, RPh, NCPA Executive Vice President and CEO. "Increasingly, public and private payers are rightly asking questions and demanding more equitable pharmacy benefit arrangements. Medicare, the Pentagon, state governments and major companies are all moving in this direction and today's vote shows the Senate is, too. We commend Senator Cantwell for her leadership on this issue and we sincerely appreciate her colleagues' support."

PBMs commonly bill plan sponsors much more than they reimburse pharmacies for dispensing a prescription and pocket the difference. In addition, rebates from brand name drug manufacturers are passed on to plan sponsors only after the PBM retains a large share. The pursuit of more rebates to pad PBM profits has been known to lead them to switch patients from generic drugs to equally effective, pricier brand name medicines. Traditionally, plan sponsors have been aware of little to none of these and other questionable PBM practices.

The Cantwell amendment would require PBMs to provide basic aggregate information so that health plan sponsors can make educated decisions about which PBM, if any, offers the best value for the plan and patients. Under the amendment, plan sponsors and the commissioners of any state insurance exchange could have access to data in three key areas:

• First, a breakdown of those prescriptions provided through retail pharmacies as well as mail-order pharmacies and the generic drug dispensing and substitution rates of each.
• Second, the average aggregate amount and characterization of rebates and other discounts paid by manufacturers, and the aggregate amount kept by PBMs.
• Third, the average aggregate difference between the amount the PBM is paid by the plan and the average aggregate amount the retail and mail-order pharmacies are paid, respectively, for dispensing a prescription.

The disclosure requirements only apply to PBMs operating in a health insurance exchange. In July, the House Energy and Commerce Committee approved a similar amendment, to its health reform plan (H.R. 3200). The Congressional Budget Office indicated to House staff that the disclosure provision would not increase federal spending.

NCPA and consumer groups have consistently advocated PBM reform. NCPA testified before a Senate Commerce Subcommittee in July and submitted comments to a House Oversight and Government Reform Subcommittee hearing in June on the Federal Employee Health Benefits Program. At the latter, a top government auditor testified that there's a "good chance" taxpayers and plan participants are "not getting a good deal because of the lack of transparency" by PBMs.

The National Community Pharmacists Association, founded in 1898, represents the nation's community pharmacists, including the owners of more than 23,000 pharmacies. The nation's independent pharmacies, independent pharmacy franchises, and independent chains dispense nearly half of the nation's retail prescription medicines. To learn more go to the NCPA Web site.