NCPA Executive Update

NCPA Executive Update delivers insights on legislative, regulatory, policy, and industry developments from NCPA CEO B. Douglas Hoey, Pharmacist, MBA, to NCPA members and pharmacy leaders every Friday.

PBM says it's not 'contractually obligated' to contain costs ... but isn't that why they exist? | NCPA Executive Update | May 11, 2018

by NCPA | May 11, 2018

Dear Colleague,

Doug Hoey

"60 Minutes" needed only 14 minutes to say what NCPA has said for decades.

Last Sunday, the TV news magazine did a story called "The Problem with Prescription Drug Prices" about Rockford, Ill., a city of over 150,000 that has struggled to pay its "skyrocketing" health care bill for city employees. The show specifically talked about the expense for two children on the drug Acthar. In case you haven't encountered a prescription for Acthar, it's the drug of choice for infantile spasms and is increasingly used for other therapeutic reasons.

This isn't the first time Acthar has been in the news. Several years ago, when the drug was still owned by Questcor, the New York Times (among others) reported the drug's skyrocketing price had gone from $40/vial to $40,000/vial since 2001. Mallinckrodt now owns Acthar and was skewered pretty severely in the segment.

However, for the 10.5 million viewers "60 Minutes" averages, the name of the corporate villain that might have been new to many of them was Express Scripts. ESI was the PBM responsible for managing Rockford's prescription drug spend – or so the city thought. The "60 Minutes" story reported that Express Scripts also owns its own mail order pharmacy (surprise!) as well as the specialty pharmacy that city employees were steered into to fill their Acthar prescriptions. The city was shocked by the conflict of interest. Maybe NCPA needs to add Rockford to our mailing list. If they had read our communications over the last couple of decades, they would have known about the glaring conflicts of interest that lead to PBMs contributing to the higher costs of prescription drugs.

Anyway, Rockford has filed a lawsuit against Express Scripts for not advocating in the city's best interest. Express Scripts denied any wrongdoing, and in its motion to dismiss the lawsuit said that it was not "contractually obligated" to contain costs(!). The city's lawyer, Don Haviland, was indignant. "It is laughable for them to say that. That is their business model. They – they sell the model of, ‘We will contain your costs. We will lower drug prices.' I welcome that argument in court before a jury of 12. I welcome that argument."

The day after the "60 Minutes" report, CMS Administrator Seema Verma sent out this tweet:

"However, with PBMs serving BOTH the manufacturer and the plan, all the incentives are lined up for manufacturers to set higher & higher prices. As prices go up, the manufacturer, the plan & the PBM all win EXCEPT the patient."

Sounds like she might have been briefed on the previous night's "60 Minutes."

Today, President Trump is scheduled to make an announcement about drug prices. Everyone knows the president is difficult to predict, but we have met with the administration several times in the last month representing the views of the nation's community pharmacists in lowering prescription drug prices for consumers. We're hopeful that the president's announcement truly gets to the heart of prescription drug prices. In the meantime, the "60 Minutes" story about the city of Rockford employees and their families is the same story experienced by thousands of other plan sponsors (employers, taxpayers, individuals buying their own health insurance).

As other cities, counties, and states make choices between hiring firefighters, policemen, and teachers or paying their prescription drug bill, the message from the country's largest PBM that they are not "contractually obligated" to contain costs is a refrain that should be repeated four billion times – once for every prescription where plan sponsors thought the PBM they hired was managing costs.

Meanwhile, community pharmacy should continue to do what it does best – take care of patients. NCPA will continue to advocate for the rights of patients and PBM reform.

Doug Hoey

P.S. Make sure to come to NCPA 2018 Annual Convention to learn more about keeping pace in this changing market. (Registration opens on Monday with a flash sale – a reduced registration rate – but only for two weeks. Don't miss it.)