Suit Seeks to Block Enforcement of Title II of DC Access Rx Act; New Low-Income & Uninsured Prescription Drug Program NOT Focus of Suit

Little-Noticed Provision â?? Title II â?? Could Increase DC’s Prescription Drug Costs By 10 Percent or $600 Million Dollars over Next Decade, New Analysis Suggests

Washington, DC; 06.28.04 — Seeking to protect Washington, DC residents from a 10 percent hike in their prescription drug costs, the Pharmaceutical Care Management Association (PCMA) today filed suit in the US District Court for the District of Columbia to block enforcement of Title II of DC’s recently enacted “Access Rx Act of 2004,” the association announced today. The other Titles of the Access Rx Act, including those pertaining to prescription drug coverage for low-income seniors and uninsured District residents and drug manufacturer-marketing disclosure requirements, are NOT the focus of the action and are unaffected by the new suit.

Enacted with little debate, Title II will, if left intact, impose massive new prescription drug costs on District residents and employers. A new analysis conducted by PricewaterhouseCoopers suggests that Title II of the Access Rx Act could increase prescription drug costs for District residents and employers by more than 10 percent â?? or $600.7 million dollars over the next decade.

“Regrettably, if left inact, Title II will result in District residents paying more for their prescription drugs,” said PCMA President Mark Merritt. “The irony is that Title II would undermine all the good intentions of the Access Rx Act by increasing drug prices. Title II is a sweet deal for drug manufacturers that will cost District residents $600 million dollars in added prescription drug costs over the next decade. The District’s working families, disabled, and retirees deserve better.”

PCMA is the national association representing America’s pharmacy benefit managers (PBMs). PBMs administer prescription drug plans for more than 200 million Americans with prescription drug coverage provided through the nation’s small and large employers, Taft-Hartley union plans, health insurers, state and federal-employee benefit plans, Medicare Advantage health plans, and state Medicaid plans. PBMs help drive down the cost of prescription drugs for consumers and plan sponsors â?? on average by 25 percent â?? by negotiating discounts with drug manufacturers and retail pharmacies. These savings are, in turn, passed on to consumers. PBMs also provide consumers with important quality protections, such as real-time detection of potentially dangerous drug interactions; disease management; and physician and patient education.

The District of Columbia is the second jurisdiction in the US â?? the state of Maine being the first â?? to attempt to impose this misguided legislation on consumers and businesses. On March 9, 2004, the US District Court in Bangor, ME blocked the Maine law from taking effect. The Court ruled that the Maine law is unconstitutional, in that it violates federal benefits law (ERISA), and represents an “illegal takings” of PBMs’ proprietary information. A trial could take place in Maine in 2005. In addition, last year during the Medicare prescription drug debate, the Congressional Budget Office (CBO) estimated that a similar proposal at the federal level would cost the Medicare program $40 billion over 10 years. Congress ultimately rejected that proposal.

PCMA is seeking an injunction to block only Title II of the Access Rx Act. PCMA believes strongly that Title II will result in higher prescription drug costs for District residents and will be deemed unconstitutional:

Title II would embolden drug makers to charge higher drug prices. Title II would require PBMs to divulge proprietary information they rely upon on behalf of purchasers to hold down consumers’ drug costs. Competition and the confidentiality of price negotiations with manufacturers are essential to driving down drug prices. Public disclosure of this information only serves to undermine incentives to aggressive competition and creates a price floor that will harm District residents.

Title II would undermine federal workers’ and retirees’ access to affordable medicines. Title II would severely undermine PBMs’ ability to provide federal employees, retirees, and their dependents with access to safe, effective, and affordable medicines. Title II means District consumers would likely pay more and would prevent PBMs from using the tools that have been proven to hold down drug costs.

Title II would encourage frivolous lawsuits against DC employers by personal injury lawyers. Title II would allow confidential information to be accessed through court filings under the District of Columbia’s Consumer Protection Procedures Act and expose PBMs and District employers to new lawsuits. Title II would empower the trial bar to file spurious lawsuits that would enrich trial lawyers, but force consumers, employers, and the DC government to pay more for prescription drugs.

Title II would harm District residents by threatening ERISA, an important law employers use to voluntarily provide high-quality, affordable health care benefits to their workers and dependents. Signed into law in 1974 with bipartisan support, ERISA has been an important avenue for small and large employers to provide affordable, quality health care for their workers and retirees and to assure consumers the same uniform rights and protections no matter where they reside. Case law is well-established regarding the principle of ERISA pre-emption over conflicting state laws and the preservation of high-quality, affordable health care coverage for millions of Americans. Just last week, the US Supreme Court reasserted the primacy of ERISA over conflicting state laws in health care regulation.

Title II would harm consumers by adding more bureaucratic red tape to the system, leading to higher administrative costs and premiums. Title II holds the potential to rewrite every contract negotiated in the District of Columbia between PBMs and private and public purchasers. PBMs contract with employers, health plans, unions, and public purchasers to administer prescription drug benefits. Title II would radically alter PBMs’ functions in the District of Columbia by improperly designating them as “fiduciaries,” even though the District cannot transform an entity into a “fiduciary” with attendant fiduciary responsibilities simply by saying it is so. This approach is unprecedented and at odds with laws at the federal level and every other state, save Maine (which the US District Court in Maine has blocked). It represents a radical departure from the existing PBM regulatory framework. By stripping away the very techniques PBMs use to lower drug costs, District residents will undoubtedly pay more for prescriptions drugs.

PBMs help protect consumers from paying higher drug prices, both to drug manufacturers and retail pharmacies. As any uninsured consumer or senior without drug coverage knows, they pay the highest drug prices of all at the retail pharmacy counter because they do not have access to the volume purchasing and savings provided by PBMs. The US General Accounting Office (GAO) has found that PBMs provide consumers significant savings. A January 2003 GAO analysis concluded PBMs negotiated savings for federal employees’ benefit plans of up to 53 percent below what consumers would have otherwise paid on average at retail pharmacies. Regrettably, Title II would put these proven savings at risk by limiting PBMs’ ability to achieve more savings for District consumers.

# # #

The Pharmaceutical Care Management Association (PCMA) is the national trade association representing America’s pharmaceutical benefit managers (PBMs). PCMA member companies provide pharmaceutical care management services to more than 200 million Americans.

Contact Information:
Phil Blando
202-207-3614

Suit Seeks to Block Enforcement of Title II of DC Access Rx Act; New Low-Income & Uninsured Prescription Drug Program NOT Focus of Suit

Little-Noticed Provision â?? Title II â?? Could Increase DC’s Prescription Drug Costs By 10 Percent or $600 Million Dollars over Next Decade, New Analysis Suggests

Washington, DC; 06.28.04 — Seeking to protect Washington, DC residents from a 10 percent hike in their prescription drug costs, the Pharmaceutical Care Management Association (PCMA) today filed suit in the US District Court for the District of Columbia to block enforcement of Title II of DC’s recently enacted “Access Rx Act of 2004,” the association announced today. The other Titles of the Access Rx Act, including those pertaining to prescription drug coverage for low-income seniors and uninsured District residents and drug manufacturer-marketing disclosure requirements, are NOT the focus of the action and are unaffected by the new suit.

Enacted with little debate, Title II will, if left intact, impose massive new prescription drug costs on District residents and employers. A new analysis conducted by PricewaterhouseCoopers suggests that Title II of the Access Rx Act could increase prescription drug costs for District residents and employers by more than 10 percent â?? or $600.7 million dollars over the next decade.

“Regrettably, if left inact, Title II will result in District residents paying more for their prescription drugs,” said PCMA President Mark Merritt. “The irony is that Title II would undermine all the good intentions of the Access Rx Act by increasing drug prices. Title II is a sweet deal for drug manufacturers that will cost District residents $600 million dollars in added prescription drug costs over the next decade. The District’s working families, disabled, and retirees deserve better.”

PCMA is the national association representing America’s pharmacy benefit managers (PBMs). PBMs administer prescription drug plans for more than 200 million Americans with prescription drug coverage provided through the nation’s small and large employers, Taft-Hartley union plans, health insurers, state and federal-employee benefit plans, Medicare Advantage health plans, and state Medicaid plans. PBMs help drive down the cost of prescription drugs for consumers and plan sponsors â?? on average by 25 percent â?? by negotiating discounts with drug manufacturers and retail pharmacies. These savings are, in turn, passed on to consumers. PBMs also provide consumers with important quality protections, such as real-time detection of potentially dangerous drug interactions; disease management; and physician and patient education.

The District of Columbia is the second jurisdiction in the US â?? the state of Maine being the first â?? to attempt to impose this misguided legislation on consumers and businesses. On March 9, 2004, the US District Court in Bangor, ME blocked the Maine law from taking effect. The Court ruled that the Maine law is unconstitutional, in that it violates federal benefits law (ERISA), and represents an “illegal takings” of PBMs’ proprietary information. A trial could take place in Maine in 2005. In addition, last year during the Medicare prescription drug debate, the Congressional Budget Office (CBO) estimated that a similar proposal at the federal level would cost the Medicare program $40 billion over 10 years. Congress ultimately rejected that proposal.

PCMA is seeking an injunction to block only Title II of the Access Rx Act. PCMA believes strongly that Title II will result in higher prescription drug costs for District residents and will be deemed unconstitutional:

Title II would embolden drug makers to charge higher drug prices. Title II would require PBMs to divulge proprietary information they rely upon on behalf of purchasers to hold down consumers’ drug costs. Competition and the confidentiality of price negotiations with manufacturers are essential to driving down drug prices. Public disclosure of this information only serves to undermine incentives to aggressive competition and creates a price floor that will harm District residents.

Title II would undermine federal workers’ and retirees’ access to affordable medicines. Title II would severely undermine PBMs’ ability to provide federal employees, retirees, and their dependents with access to safe, effective, and affordable medicines. Title II means District consumers would likely pay more and would prevent PBMs from using the tools that have been proven to hold down drug costs.

Title II would encourage frivolous lawsuits against DC employers by personal injury lawyers. Title II would allow confidential information to be accessed through court filings under the District of Columbia’s Consumer Protection Procedures Act and expose PBMs and District employers to new lawsuits. Title II would empower the trial bar to file spurious lawsuits that would enrich trial lawyers, but force consumers, employers, and the DC government to pay more for prescription drugs.

Title II would harm District residents by threatening ERISA, an important law employers use to voluntarily provide high-quality, affordable health care benefits to their workers and dependents. Signed into law in 1974 with bipartisan support, ERISA has been an important avenue for small and large employers to provide affordable, quality health care for their workers and retirees and to assure consumers the same uniform rights and protections no matter where they reside. Case law is well-established regarding the principle of ERISA pre-emption over conflicting state laws and the preservation of high-quality, affordable health care coverage for millions of Americans. Just last week, the US Supreme Court reasserted the primacy of ERISA over conflicting state laws in health care regulation.

Title II would harm consumers by adding more bureaucratic red tape to the system, leading to higher administrative costs and premiums. Title II holds the potential to rewrite every contract negotiated in the District of Columbia between PBMs and private and public purchasers. PBMs contract with employers, health plans, unions, and public purchasers to administer prescription drug benefits. Title II would radically alter PBMs’ functions in the District of Columbia by improperly designating them as “fiduciaries,” even though the District cannot transform an entity into a “fiduciary” with attendant fiduciary responsibilities simply by saying it is so. This approach is unprecedented and at odds with laws at the federal level and every other state, save Maine (which the US District Court in Maine has blocked). It represents a radical departure from the existing PBM regulatory framework. By stripping away the very techniques PBMs use to lower drug costs, District residents will undoubtedly pay more for prescriptions drugs.

PBMs help protect consumers from paying higher drug prices, both to drug manufacturers and retail pharmacies. As any uninsured consumer or senior without drug coverage knows, they pay the highest drug prices of all at the retail pharmacy counter because they do not have access to the volume purchasing and savings provided by PBMs. The US General Accounting Office (GAO) has found that PBMs provide consumers significant savings. A January 2003 GAO analysis concluded PBMs negotiated savings for federal employees’ benefit plans of up to 53 percent below what consumers would have otherwise paid on average at retail pharmacies. Regrettably, Title II would put these proven savings at risk by limiting PBMs’ ability to achieve more savings for District consumers.

# # #

The Pharmaceutical Care Management Association (PCMA) is the national trade association representing America’s pharmaceutical benefit managers (PBMs). PCMA member companies provide pharmaceutical care management services to more than 200 million Americans.

Contact Information:
Phil Blando
202-207-3614

Merritt: ‘Ruling Strikes a Blow for Quality & Affordability; Upholds PBMs’ Cost Savings & Quality Improvement Techniques’

Washington, DC; 06.21.04 — The US Supreme Court’s decision today to reverse the Fifth Circuit in Aetna Health v. Davila is a milestone in ERISA case law that preserves employers’ ability to custom-design prescription drug plans; helps puts the brakes on unnecessary litigation; and further validates the tools pharmacy benefit managers (PBMs) rely upon to keep prescription drugs affordable and accessible for working families, retirees, and plan sponsors, the Pharmaceutical Care Management Association (PCMA) said today.

“Today’s decision by the Court is a huge loss for the trial lawyers and strikes a blow for all who are concerned about keeping high-quality prescription drug coverage affordable for working families, retirees, and employers,” said PCMA President Mark Merritt. “With this decision, the Court has signaled that predictability and uniformity in employee-benefit design trumps the personal-injury lawyer agenda. This ruling will reverberate across the employee-benefit landscape for years to come.”

PCMA is the national association representing America’s pharmacy benefit managers (PBMs). PBMs administer prescription drug plans for more than 200 million Americans with prescription drug coverage provided through the nation’s small and large employers, Taft-Hartley union plans, health insurers, state and federal-employee benefit plans, and state Medicaid plans. PBMs help drive down the cost of prescription drugs for consumers and plan sponsors by negotiating discounts with drug makers and retail pharmacies. PBMs also provide consumers with important quality protections, such as real-time detection of potentially dangerous drug interactions; disease management; and drug utilization review.

PCMA strongly believes that today’s ruling helps further validate the tools and techniques PBMs rely upon to keep prescription drugs affordable and accessible for working families and retirees. One key tool validated by the Court lies with a plan’s use of “step therapy,” whereby a physician moves progressively from less costly drug regimens to more expensive therapies. Drug plans’ use of step therapy is a well-established principle throughout the entire medical field and is a common-sense approach that uses scarce health care resources most effectively.

In addition to preserving employers’ ability to custom-design employee benefit plans and affirming the PBM architecture, today’s ruling also upholds the integrity of current health-benefit appeals processes available to consumers under ERISA. Aided and abetted by the trial bar, the plaintiff in this case completely bypassed every avenue available to him to resolve this coverage dispute quickly and instead fast-tracked this case to the nearest courtroom. PCMA is hopeful this ruling could help stem the tide of unnecessary litigation.

As background, the Employee Retirement Income Security Act (ERISA) is a landmark law employers have relied upon for three decades to voluntarily provide high-quality, affordable health care benefits to their workers and dependents. Signed into law in 1974 with bipartisan support, ERISA has been an important conduit for employers to provide affordable, quality health care for their workers and retirees and to assure consumers the same uniform rights and protections no matter where they reside. Bolstered by today’s ruling, case law is well-established regarding the principle of ERISA pre-emption over conflicting state laws and the preservation of high-quality, affordable health care coverage for millions of Americans.

# # #

The Pharmaceutical Care Management Association (PCMA) is the national trade association representing America’s pharmaceutical benefit managers (PBMs). PCMA member companies provide pharmaceutical care management services to more than 200 million Americans.

Contact Information:
Phil Blando
202-207-3614

Merritt: ‘New Drug Card Program is Providing Seniors with Real Choice, Deep Discounts, & Valuable Information’

New PCMA Analysis Finds Basket of Commonly Prescribed Prescription Drugs Declines By Additional Average of 13 Percent in Past Month under Drug Card Program

Washington, DC; 06.08.04 — Testifying today before the Senate Finance Committee on the week-old Medicare prescription drug discount card program, PCMA President Mark Merritt told the Committee the new program is working as Congress and the Administration intended for beneficiaries and that choice and competition are driving down prescription drug prices, the association said today.

As part of his testimony, Mr. Merritt also unveiled a new PCMA analysis finding that the price of a basket of commonly prescribed brand-name prescription drugs has declined even further â?? by an average of 13 percent â?? since the new Medicare price comparison website went public last month. PCMA’s analysis found that the decline in drugs prices ranged from 8 percent to as much as a 20 percent decline in prices in just the past month. An earlier preliminary PCMA industry survey found that seniors enrolling in the drug card program should expect discounts averaging 17 percent for brand-name drugs and 35 percent for generics.

“One week into the new program, we are seeing positive signs that the new Medicare drug discount card program is working as Congress intended,” Mr. Merritt told the Committee. “With PCMA member companies working hard to inform beneficiaries about the new options available to them, seniors and the disabled are learning more about the new program. And the more they learn first-hand, the more they see the drug card program is delivering lower prescription drug prices and tangible value.”

Noting that the Centers for Medicare & Medicaid (CMS) has found that enrollment is already at 40 percent of its projected goal just one week into the new program, Mr. Merritt also briefed the Committee about PCMA member companies’ outreach initiatives to raise awareness among beneficiaries about the new options available to them, including:

TV, radio, and newspaper advertisements;
Information mailers to beneficiaries;
Marketing at tens of thousands of neighborhood & chain drug store pharmacies across the country;
Educational outreach to physicians; and
Outreach through seniors groups, community-based organizations, faith-based groups; and other civic organizations.
# # #

The Pharmaceutical Care Management Association (PCMA) is the national trade association representing America’s pharmaceutical benefit managers (PBMs). PCMA member companies provide pharmaceutical care management services to more than 200 million Americans.

Contact Information:
Phil Blando
202-207-3614

VA Drug-Delivery Approach Would Lead to Fewer Choices for Seniors, Massive Cost-Shifting to Consumers in Private Marketplace

Washington, DC; 06.02.04 — Replicating a Veterans’ Administration-style model to delivering prescription drug benefits to more than 40 million Medicare beneficiaries is a flawed approach that would result in fewer choices for America’s seniors and would likely shift billions of dollars of prescription drug spending onto consumers in the private marketplace, the Pharmaceutical Care Management Association (PCMA) said today.

Barely 24 hours into the new Medicare prescription drug discount card program, opponents of the new program are, regrettably, pushing an agenda that would lead to fewer choices for seniors, the association added. Rather than working to sow fear and confusion, PCMA challenges policymakers to work to raise greater awareness about the value of the new drug card program, particularly the $600 transitional assistance available to low-income seniors.

PCMA believes that a private-public partnership providing more choice, competition, and information is the best avenue for lowering prescription drug costs for seniors and disabled beneficiaries. America’s PBMs have worked to drive down drug prices in other parts of the system and look forward to bringing these same benefits to seniors in Medicare. According to a PCMA industry survey, seniors enrolling in a PBM-administered prescription drug discount cards should expect discounts averaging 17 percent for brand-name drugs and 35 percent for generics.

In a 2000 report examining the viability of moving Medicare to the VA model, the non-partisan US General Accounting Office concluded that this approach would raise prescription drug prices and shift costs to other parts of the system. Specifically, the GAO noted that “mandating that federal prices for outpatient prescription drugs [such as the VA model] be extended to a large group of purchasers, such as Medicare beneficiaries, could lower the prices they pay, but raise prices for others.”

PCMA believes strongly that the VA prescription drug delivery model is not viable and sustainable in Medicare:

The VA model would lead to fewer choices for seniors. The VA national formulary requires access to prescription drugs in 31 classes. By contrast, the new Medicare drug discount card program requires that beneficiaries have access to drugs in 209 therapeutic classes.
The VA model relies upon a one-size-fits-all national formulary. The VA model relies upon a national formulary, delivering prescription drugs via VA-owned hospitals and pharmacies. The VA acts as the sole purchaser and the only distributor of prescription drugs; participating physicians are required to follow the one national formulary.
The VA model would lead to massive cost-shifting to other parts of the health care system, including the private marketplace. VA drug spending represents about one percent of all prescription drug spending. Medicare beneficiaries, by contrast, are estimated to account for about 40 percent of prescription drug spending. Because the VA drug spending represents only one percent of drug spending, cost shifting is kept to a minimum. Moreover, the VA pays fixed prices for drugs that are established by law. For example, brand-name drugs listed on the Federal Supply Schedule (FSS) are automatically provided to the VA at a 24 percent lower price than average private-sector price. Pulling 40 percent of all drug spending under the VA-style umbrella â?? and requiring an automatic 24 percent discount for brand-name drugs under the FSS â?? would represent a massive disruption in the marketplace and lead to billions of dollars of higher drug costs in other parts of the system.
The VA’s P&T committee structure would raise questions in Medicare. The VA’s pharmacy & therapeutic committee (P&T) representatives â?? the very individuals charged with designing the VA’s formulary â?? are employed directly by the VA. In contrast, private-sector P&T committees â?? including those envisioned to participate in the new Medicare drug benefit through PBMs â?? are comprised of physicians, pharmacists, and other parties with no financial interest in formulary recommendations and make their recommendations based solely upon clinical data. Replicating the VA model in the Medicare program would raise questions about whether Medicare was putting cost considerations ahead of clinical data.
# # #

The Pharmaceutical Care Management Association (PCMA) is the national trade association representing America’s pharmaceutical benefit managers (PBMs). PCMA member companies provide pharmaceutical care management services to more than 200 million Americans.

Contact Information:
Phil Blando
202-207-3614

HCFA Study of the Pharmaceutical Benefit Management Industry