Washington, DC; 08.19.04 — Mark Merritt, President of the Pharmaceutical Care Management Association (PCMA) released the following statement regarding today’s release of draft Medicare formulary model guidelines from the US Pharmacopeial Convention (USP). PCMA is the national association representing America’s pharmacy benefit managers (PBMs):

“A guiding principle of the bipartisan Medicare Modernization Act (MMA) is that America’s seniors deserve a Medicare prescription drug benefit that builds upon PBMs’ proven success in the commercial marketplace in striking the right balance between cost, access, and quality.

“In the commercial marketplace, PBMs rely upon a wide range of tools and techniques â?? including formularies â?? to negotiate discounts with drug manufacturers. Employers, unions, health plans, and other purchasers typically offer prescription drug plans with coverage for 50 to 100 therapeutic classes. According to a recent report by PricewaterhouseCoopers, these tools help drive drug discounts that lower the cost of prescription drugs by an average 25 percent in the commercial marketplace. PricewaterhouseCoopers estimates that over the next decade PBMs will save $1.3 trillion on prescription drug costs for consumers and employers.

“Today’s draft model guidelines from the USP call for Medicare formularies that cover 146 therapeutic categories and classes. If embraced, such an approach would move far beyond how formularies are structured currently in the commercial marketplace and could have the unintended consequence of increasing costs and jeopardizing a workable Medicare prescription drug benefit for seniors.

“Even more troubling are back-door efforts by the drug manufacturers and their front groups to have 300 or more therapeutic classes of drugs covered in the Medicare formulary. This approach would undermine competition in the Medicare prescription drug benefit and be tantamount to a blank check for the drug manufacturers. Over the long-term, this structure could bankrupt the Medicare program and diminish the very drug benefit seniors have waited so long to receive.

“Today’s draft model guidelines from USP represent an important first step. As this process continues, PCMA and its member companies look forward to working with beneficiaries, policymakers, and others to structure a workable Medicare prescription drug benefit that balances beneficiary access and cost containment.”

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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

PCMA Again Stresses Importance of Educating Seniors and Disabled about New Benefits

Washington, DC; 08.10.04 — The Pharmaceutical Care Management Association (PCMA) released the following statement regarding a survey released today by the Kaiser Family Foundation on attitudes toward the new Medicare part D prescription drug benefit. PCMA is the national association representing America’s pharmacy benefit managers (PBMs):

“Once again the Kaiser Family Foundation has chosen to issue a report that plays into the hands of those seeking to undermine the new Medicare prescription drug benefit. This time, it’s a survey highlighting seniors’ concerns about the program even before the regulations governing the new benefit were released.”

“The potential savings for Medicare enrollees are real. A PCMA analysis conducted by PricewaterhouseCoopers shows that market-based pharmacy benefit management will save Medicare beneficiaries in private plans $693 billion during the next ten years. In 2005, these savings translate to $937 per Medicare beneficiary with prescription drug coverage through Medicare Advantage plans, Medicare supplemental policies, and employer-sponsored retiree coverage.”

“Study after study by authorities such as the Congressional Budget Office, Federal Trade Commission, and General Accounting Office show that PBMs enhance access to affordable prescription drug benefits. Rather than reverting to a one-size-fits-all government system, the new drug benefit should be given a chance to build on the proven success the PBM model has brought the private marketplace.”

“PCMA and its member companies stand ready to work with Congress and the Administration to ensure that the new Medicare drug benefit works for America’s seniors and disabled. We urge other interested parties to join us in that effort.”

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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

In 2005, PBMs Will Save $300 per New Yorker on Prescription Drug Costs

Washington, DC; 08.04.04 — Contrary to assertions made today by the New York State Attorney General’s Office, America’s pharmacy benefit managers are driving the down the cost of prescription drugs for New York consumers by an average of 25 percent and are projected to save New York consumers and employers $91 billion on their prescription drug costs over the next decade, the Pharmaceutical Care Management Association (PCMA) said today. PCMA is the national association for America’s pharmacy benefit managers (PBMs).

“No amount of rhetoric can change one simple fact: PBMs are driving down prescription drug costs for New York consumers and employers by an average of 25 percent,” said PCMA President Mark Merritt. “Without PBMs, New Yorkers would pay billions of dollars more in higher prescription drug costs. Every objective analysis â?? from the US General Accounting Office to the Congressional Budget Office to the Federal Trade Commission and the Harvard Business School â?? has found that competing PBMs are the key to reining in prescription drug costs. Today’s assertions from the New York State Attorney General’s office fly in the face of everything we know about the value PBMs provide to the system.”

According to a new analysis commissioned by PCMA and conducted by PricewaterhouseCoopers, PBMs lower the cost of prescription drugs by an average of 25 percent. Nationally, over the next ten years, PwC estimates that PBMs will save consumers and employers $1.3 trillion dollars on the cost of their prescription drugs. For Medicare beneficiaries in private plans, PBMs will drive down the cost of prescription drugs by almost $700 billion dollars over the next decade.

PricewaterhouseCoopers has also examined PBM savings in New York as well as the cost to New York consumers and employers if PBMs’ tools are blunted. Specifically, PwC has found that:

Over the next ten years, 2005-2014, PBMs are estimated to save New York consumers and employers $91.6 billion dollars on prescription drug costs.
In 2005, PBMs are estimated to save New York consumers about $3.8 billion, or about $300 dollars per New Yorker with prescription drug coverage through a PBM arrangement.
Limiting PBMs’ ability to use therapeutic interchange will lead to higher prescription drug costs for New Yorkers. In New York, from 2005-2014, limiting therapeutic interchange would result in increased prescription drug costs of 5.2 percent or about $11.8 billion.
In 2005 alone in New York, the increased prescription drug costs associated with limiting therapeutic interchange would be $500 million or about $39 dollars more per New Yorker.
In addition to the PwC, PCMA believes strongly that a growing body of evidence validates the PBM model and the value PBMs provide to the system. Specifically:

US General Accounting Office (GAO). In January 2003, the General Accounting Office examined the value provided by PBMs participating in the federal employees’ health plan. For prescription drugs dispensed through mail-order pharmacies, the average mail-order price was about 27 percent below the average cash-price paid by consumers for a brand name at a retail pharmacy and 53 percent below the average cash-price paid for generic drugs. For drugs dispensed at the retail pharmacy counter, PBMs negotiated discounts of 18 percent below what consumers would pay in cash at the retail pharmacy counter for 14 brand name drugs and 47 percent below what consumers would pay for 4 select generic drugs.

In July 2004, the Federal Trade Commission (FTC) and the Department of Justice (DoJ) unveiled a joint report on competition in the health care marketplace that concluded that the pharmacy benefit management industry is a competitive and diverse marketplace that is driving cost savings and quality improvements for health care consumers and purchasers. With respect to state legislative proposals, the FTC-DoJ report recommends that “States should consider the potential costs and benefits of regulating pharmacy benefit transparency” and goes on to note that “In general, vigorous competition in the marketplace for PBMs is more likely to arrive at an optimal level of transparency than regulation of those terms.”

Congressional Budget Office (CBO). In October 2002, the non-partisan Congressional Budget Office (CBO) estimated that PBMs have the potential to save as much as 30 percent in total drug spending relative to unmanaged purchases of prescription drugs where PBMs can use their full range of price discounts and rebates, utilization control tools, and other tools for encouraging appropriate utilization.

Harvard Business School. A July 2004 peer-reviewed, independent analysis of 670 million prescription drug claims by two economists at the Harvard Business School debunks the myth that PBMs favor brand-name prescriptions over generic drugs. According to the Harvard Business School economists Marta Wosinska, Ph.D., and Robert Huckman, Ph.D., generic substitution and generic dispensing rates at retail pharmacies and PBM mail-service pharmacies are essentially the same. In a fundamental difference from retail-pharmacy funded studies, this analysis adjusted for “therapeutic mix.” In plain English, the Harvard analysis takes into account the differences in the types of drugs consumers seek at mail-service pharmacies versus retail pharmacies. In the retail pharmacy setting, consumers typically seek prescriptions for acute conditions, whereas mail-service pharmacies are more likely to dispense prescriptions treating chronic conditions. The authors assert that this “therapeutic mix” adjustment is essential to allowing direct comparisons between PBM mail-service pharmacies and retail pharmacies.

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

Pharmacy Benefit Managers (PBMs): Tools for Managing Drug Benefit Costs, Quality, and Safety