News Releases - 2017

NCPA Shines Spotlight on PBMs in Comments to FTC

by NCPA | Dec 08, 2017

ALEXANDRIA, Va. (Dec. 8, 2017) — In comments submitted today to the Federal Trade Commission, the National Community Pharmacists Association details the problem of and proposed solutions to how pharmacy benefit managers distort the marketplace. NCPA submitted the comments after participating in a panel on competition in prescription drug markets at an FTC workshop last month.

"NCPA's FTC comments attempt to accomplish two things: explain aspects of the PBM business model that should raise competitive red flags, and offer concrete steps the Commission can take in response," said NCPA CEO B. Douglas Hoey, Pharmacist, MBA. "We believe the FTC is uniquely suited to help create a more competitive marketplace for delivering prescription drugs to patients and where access to these therapeutic remedies is robust."

NCPA described some structural flaws within the current system, which include:

  • PBMs' lack of any fiduciary obligations to health plan sponsors or beneficiaries in spite of the fact that health plan sponsors rely on PBMs, particularly in the area of benefit design. This enables PBMs to operate without transparency that would enable plan sponsors and beneficiaries to determine PBM cost-effectiveness.

  • PBM contracts and negotiations with plan sponsors are one-sided and opaque, resulting in an inability for plan sponsors to navigate these complex and obtuse contracts or understand the downstream effects on patients and pharmacies.

  • PBMs have a conflict of interest in owning mail order and specialty pharmacies, while at the same time setting reimbursement rates for the retailers that compete with the PBM pharmacies. As a result, PBMs have created a less competitive marketplace, steering patients to their own pharmacies.

NCPA's comments offered four policy recommendations for the FTC, which include:

  • Support for the Department of Labor's recommendation to require PBMs to disclose all direct and indirect compensation to ERISA plans to evaluate whether compensation to PBMs, pharmacies (including those owned by PBMs) and subcontractors are "reasonable."

  • Collaboration with DOL to create a standardized definition of what constitutes "brand," "generic," "specialty," and "rebate" for the purposes of eliminating confusion in ERISA drug plan designs.

  • Endorsement of federal and state transparency efforts surrounding PBM "maximum allowable cost" lists for generic prescription drugs.

  • Increased scrutiny of the conflicts of interest that can be attributed to PBMs operating as both a reimburser and competitor in the pharmacy marketplace.

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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 $80 billion health care marketplace and employ more than 250,000 individuals on a full- or part-time basis. To learn more, go to www.ncpanet.org, visit facebook.com/commpharmacy, or follow NCPA on Twitter @Commpharmacy.