Merritt: ‘This Agenda Would Bankrupt Medicare and Take Away Benefits from Seniors; It’s a Non-Starter”
Washington, DC; 07.02.04 — A new report released today by the Kaiser Family Foundation regarding the Medicare prescription drug benefit and its reliance on pharmacy benefit managers (PBMs) fails to recognize fully how PBMs work to balance cost, access, and quality in the private marketplace and could have been written directly from the drug manufacturers’ lobbying playbook, the Pharmaceutical Care Management Association said today.
“The drug manufacturers will undoubtedly find this report very useful in their advocacy efforts as they look to get the upper hand in implementing the new Medicare drug benefit,” said PCMA President Mark Merritt. “The report appears to assert that the proven tools PBMs use to save money and improve quality in the commercial marketplace â?? multi-tier formularies, generic substitution, drug utilization review, and competition â?? should be severely restricted when it comes to the Medicare drug benefit.”
“Serious policymakers have long recognized that an affordable, predictable, and sustainable Medicare prescription drug benefit must rely upon on the full range of tools and techniques pioneered by PBMs,” added Mr. Merritt. “If taken to its logical conclusion, the agenda being pushed in this report would eviscerate competition, provide a blank check to the drug manufacturers, and bankrupt the Medicare program. Worst of all, because of the explosive costs associated with this agenda, seniors would lose the very drug benefit they have waited so long to receive. This is a non-starter.”
Coming in advance of the expected release of the proposed rule governing the Medicare drug benefit, this report appears to be a politically-motivated attempt to scare seniors and undermine the spirit and intent of the new law. In addition, next week, the US Pharmacopeia will begin deliberations on recommendations for formulary design in the new drug benefit.
While the report acknowledges that “when used appropriately, management tools, cost sharing and utilization management can control part D expenditures without negatively affecting access and quality of care,” PCMA nonetheless believes the concerns raised in the report are flawed for a number of reasons, including:
The report presumes that a one-size-fits-all approach would benefit seniors more than increased choice, flexibility, and competition will. The facts suggest otherwise. In October 2002, the Congressional Budget Office (CBO) estimated that a drug benefit with little cost controls would increase the cost of a drug benefit by as much as 30 percent. For its part, PricewaterhouseCoopers recently estimated that PBMs lower the cost of drugs on average by 25 percent in the private sector. Blunting PBMs’ ability to exercise the full range of proven tools and techniques will raise the cost of a drug benefit for all beneficiaries and set the program on a path to fiscal insolvency.
The report wrongly presumes that formularies harm consumers. In fact, the opposite is true. Formularies help to create competition that drive down prescription drug prices for consumers and payers. Without PBMs creating competition, drug manufacturers and retail pharmacies would have a free-hand to charge seniors whatever prices they dictate. This imbalance is the very reason Medicare added a prescription drug benefit in the first place â?? to protect seniors from paying the highest retail prescription drug prices of all.
The report presumes that drug utilization management techniques such as step-therapy and prior authorization are somehow harmful to consumers. Wrong again. Drug utilization review programs provide important quality protections, such as real-time detection of potentially dangerous drug interactions; disease management; and physician and patient education. Moreover, these programs help detect fraud, prevent inappropriate and dangerous use of medications, and help target scarce health care dollars effectively. Just last week, in an unanimous ruling, the US Supreme Court validated the use of prescription drug plans’ use of step-therapy programs.
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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