Injunction Protects District Residents from 10 Percent Hike in rescription Drug Costs

New Low-Income & Uninsured Prescription Drug Program Left Fully Intact; NOT Affected by Action

Washington, DC; 12.22.04 — For the second time this year, a federal Court has rejected a state or local jurisdiction’s efforts to impose sweeping new rules on pharmacy benefit managers (PBMs) that would only serve to empower the drug manufacturers and increase consumers’ prescription drug costs, the Pharmaceutical Care Management Association (PCMA) said today. Yesterday’s decision by the US District Court in Washington, DC blocking one section, Title II, of Access Rx Act of 2004 from taking effect recognizes the distinct and unique role PBMs play in the drug delivery system and finds invalid and unconstitutional states’ efforts to impose onerous disclosure requirements on PBMs, the association said. Earlier this year, a federal Court blocked a similar law from taking effect in the state of Maine.

In ruling late yesterday, the US District Court for the District of Columbia granted PCMA an interim injunction blocking enforcement of only Title II of DC’s Access Rx Act. The other Titles of the Act, including those pertaining to prescription drug coverage for low-income seniors and uninsured residents and drug manufacturer-marketing disclosure requirements, are NOT the focus of the action and have been left fully intact by the Court. According to an independent analysis by PricewaterhouseCoopers, if allowed to become effective, Title II would result in a 10 percent increase in prescription drug costs for District residents and consumers â?? or $600.7 million over the next decade in DC alone.

“This ruling from the Federal Court is a blow to the drug makers’ lobby and will help protect District residents from an unnecessary 10-percent increase in prescription drug costs,” said PCMA President Mark Merritt. “Taken together, the Maine and DC injunctions should be a clear signal to any policymaker contemplating imposing fiduciary and disclosure requirements on PBMs that such an approach is unworkable, invalid, and unconstitutional.”

The US District Court for the District of Columbia is the second federal Court this year to rule invalid and unconstitutional state and local efforts to impose misguided fiduciary and disclosure requirements on PBMs. In March 2004, the US District Court in Bangor, Maine issued a preliminary injunction deeming LD 554, the first PBM fiduciary-disclosure law passed by any State in the Union, unconstitutional as conflicting with federal ERISA law and constituting an unfair “taking” of PBMs’ confidential and proprietary trade information.

In granting the Order, US District Court Judge Ricardo M. Urbina noted yesterday that “the evidence before the court indicates that the PBM industry is highly competitive, enhances drug safety by alerting pharmacists to dangerous drug interactions and saves consumers money by controlling drug costs.” Judge Urbina specifically upheld PCMA’s argument that Title II of the DC Access Rx Act of 2004 would represent an “illegal takings” of private property. In doing so, Judge Urbina also noted that “the evidence indicates that if enforced, Title II could have the unintended effect of actually driving the PBM business and its attendant benefits out of the District of Columbia.”

During last year’s Medicare prescription drug debate, the non-partisan Congressional Budget Office estimated public disclosure of drug pricing information would increase Medicare drug benefit costs by $40 billion and increase seniors’ premiums by more than five percent in 2006 alone. Congress ultimately rejected this approach, but preserved Medicare’s ability to make sure seniors were receiving meaningful discounts on their prescriptions.

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 Medicare Advantage health 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 disease management and physician and patient education.

In 2004, ten states have rejected PBM fiduciary and/or disclosure legislation: California, New York, Florida, Washington State, Maryland, Minnesota, Mississippi, Kansas, Iowa, and Vermont. In contrast, just one jurisdiction other than the District of Columbia â?? South Dakota â?? has approved PBM disclosure legislation in 2004. South Dakota’s legislation does NOT designate PBMs as fiduciaries.

PBMs Saving Retirees $937 Dollars Each on Prescription Drug Costs in 2005 Alone

Implications Foreseen for Medicare Prescription Drug Benefit

Washington, DC; 12.14.04 — As large employers work hard to maintain employer-sponsored retiree health benefits â?? including prescription drug coverage â?? a new survey out today finds that many employers are choosing pharmacy benefit management tools in an effort to balance prescription drug cost, access, and quality for retirees, the Pharmaceutical Care Management Association (PCMA) said today. PCMA is the national association representing America’s pharmacy benefit managers (PBMs).

“More than ever, large employers are looking to PBMs to offer their retirees access to clinically proven, cost-effective drug-benefit options, including generics and mail-service pharmacies,” said PCMA President Mark Merritt. “By offering employers a range of tools and techniques to choose from in managing drug benefits, PBMs are helping them drive down the cost of prescription drugs by an average of 25 percent, improve quality, and stretch scarce health care dollars.”

PBMs administer prescription drug plans for 200 million Americans with drug coverage provided through labor unions, employers, health insurers, federal and state employee-benefit plans, Medicare Advantage plans, and state Medicaid programs. By requiring drug manufacturers and retail pharmacies to compete based on cost and quality, PBMs are able to drive down the cost of prescription drugs by an average of 25 percent.

According to a recent analysis by PricewaterhouseCoopers, in 2005, pharmacy benefit management activities are estimated to reduce prescription drug costs by $937 per Medicare beneficiary in private plans, including Medicare Advantage health plans and in employer-sponsored retiree benefit plans. Overall in 2005, pharmacy benefit management activities are estimated to save $18 billion in Medicare-related spending in Medicare Advantage and in retiree-sponsored plans.

According to new data released by the Kaiser Family Foundation and conducted by Hewitt Associates, 65 percent of America’s large employers are relying upon PBMs to administer prescription drug plans for their retirees that are 65 years of age and older. The vast majority â?? 98 percent â?? of employer-sponsored retiree benefit plans offer prescription drug coverage and, more than ever, are relying upon a wide range of proven PBM tools and techniques, including multi-tier formularies, step therapy, therapeutic interchange, and prior authorization. With respect to mail-service pharmacy, 94 percent of large employers offer their retirees an integrated mail-order and retail pharmacy benefit. Just six percent of surveyed employers offer a retail-only pharmacy benefit.

These data also have implications as policymakers continue to implement the new Medicare prescription drug benefit.

“Policymakers should preserve the full range of proven PBM tools and techniques in the new Medicare prescription drug benefit,” added Mr. Merritt. “Without effective PBM participation, program costs will soar and seniors will be forced to pay higher premiums and out-of-pocket costs with no corresponding benefit.”

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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

Initiative Builds Upon Proven Strategies Pioneered by PBMs for 200 Million Americans

Washington, DC; 12.09.04 — Building upon strategies pioneered by pharmacy benefit managers for 200 million Americans, a new educational initiative unveiled today by Consumer Reports to compare the clinical and cost-effectiveness of brand-name and generic drugs for a variety of conditions is an important step forward in the ongoing broader effort to provide consumers and their physicians with information they value and in stretching scarce health care dollars, the Pharmaceutical Care Management Association (PCMA) said today. PCMA is the national association representing America’s pharmacy benefit managers (PBMs).

“Today’s initiative builds on the strategies pioneered by PBMs that have worked to provide 200 million Americans an average savings of 25 percent on prescription drug costs,” said PCMA President Mark Merritt. “PCMA applauds Consumer Reports for shining a spotlight on an issue of critical importance to consumers, physicians, employers, government purchasers, PBMs, and others. PBMs have been at the forefront of efforts to help expand consumers’ access to clinically proven and cost-effective prescription drug options, including generics and mail-service pharmacies.”

PBMs administer prescription drug plans for 200 million Americans with drug coverage provided through labor unions, employers, health insurers, federal and state employee benefit plans, Medicare Advantage plans, and state Medicaid programs. By requiring drug manufacturers and retail pharmacies to compete based cost and quality, PBMs are able to drive down the cost of prescription drugs by an average of 25 percent. According to an analysis by PricewaterhouseCoopers, PBMs will save consumers and employers $1.3 trillion dollars on prescription drug costs over the next decade.

While the Consumer Union analysis compares prices paid by cash-paying consumers for prescriptions dispensed through retail pharmacies, it is important to note that consumers with PBM coverage typically pay far less — in some cases more than 50 percent less â?? than the price charged to the uninsured or cash-paying consumer at a retail pharmacy counter. Numerous data, including those from the Government Accountability Office and the Congressional Budget Office, have found that PBMs offer substantial discounts to consumers on both brand-name and generic drugs compared to cash-paying customers at retail pharmacy counters.

These issues also hold important implications for the Medicare and Medicaid programs. In the Medicare program, policymakers have sought to build on proven PBM strategies â?? including multi-tier formularies, mail-service pharmacies, and generic alternatives â?? in providing seniors and the disabled with an affordable, high-quality prescription drug benefit. Recently, Congress appropriated $15 million to the Agency for Healthcare Research and Quality to examine clinical effectiveness of prescription drugs and other medical services. In the Medicaid program, at a time of increased costs, states have barely begun to scratch the surface in leveraging PBMs tools â?? including examining the comparative cost and efficacy of prescription drugs â?? in helping to hold the line on prescription drug spending.

“As policymakers confront the challenge of delivering prescription drug benefits to Medicare and Medicaid beneficiaries, it is critical that they rely upon scientific evidence and cost-effective options,” Mr. Merritt added. “Without effective PBM participation, prescription drug costs will soar with no corresponding benefit to beneficiaries.”

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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

PBMs Saving New Yorkers $91 Billion on Prescription Drug Costs Over Next Decade; Expanding Access to Cost-Effective Alternatives, Including Generics & Mail-Service Pharmacies

Washington, DC; 12.06.04 — An expanded retail pharmacy price-comparison website initiative unveiled today by the New York State Attorney General’s office underscores the central role that pharmacy benefit managers play in protecting New York consumers and employers from excessive retail pharmacy mark-ups on prescription drugs and should serve as a reminder to policymakers to preserve PBMs’ ability to promote cost-effective alternatives, including access to generics and mail-service pharmacies, the Pharmaceutical Care Management Association (PCMA) said today. PCMA is the national association representing America’s pharmacy benefit managers (PBMs).

“Today’s initiative underscores the essential role that PBMs play in driving down prescription drug costs by an average of 25 percent for New York consumers and employers,” said PCMA President Mark Merritt. “Over the next decade, PBMs will save New York consumers and employers $91 billion on the cost of prescription drugs. By negotiating discounts with retail pharmacies and drug manufacturers and providing cost-effective alternatives like the mail-service pharmacy option, PBMs are working to lower prescription drug costs in New York.”

Retail pharmacies have long charged consumers — especially the uninsured and those with no drug coverage provided through a PBM — wildly varying prescription drug prices. PBMs negotiate with retail pharmacies and drug manufacturers for discounts on prescription drugs. 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. In New York, more than 12 million consumers have prescription drug coverage administered through a PBM.

According to an analysis by PricewaterhouseCoopers (PwC), PBMs lower the cost of prescription drugs by an average of 25 percent. PwC has also examined PBM savings in New York as well as the cost impact to New York if PBMs’ tools are blunted. Specifically, PwC has found:

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 more than 12 million New York consumers about $3.8 billion, or about $300 dollars per New Yorker with prescription drug coverage through a PBM arrangement.
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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

Washington, DC; 12.03.04 — PCMA President Mark Merritt issued the following statement in response to the Centers for Medicare & Medicaid Services’ draft guidance on how the Agency will evaluate Medicare formularies and other plan structures in Medicare prescription drug benefit plans. The Pharmaceutical Care Management Association (PCMA) is the national association representing pharmacy benefit managers:

“A key principle of the Medicare Modernization Act is that America’s seniors deserve a Medicare prescription drug benefit that builds upon the proven record of pharmacy benefit managers (PBMs) in delivering safe, effective, and affordable prescription drugs. In other parts of the system, PBMs have worked collaboratively with employers, unions, health insurers, and government programs to help structure formularies that provide access to needed medications at an affordable price. According to an analysis by PricewaterhouseCoopers, PBMs drive down the cost of prescription drugs by an average of 25 percent and will save consumers and employers $1.3 trillion dollars on prescription drug costs between now and 2014.

“Today’s draft guidance from CMS is a constructive effort to address concerns raised previously by employers, health insurers, PBMs, and others. By reaffirming the value that private-sector formularies provide to both consumers and purchasers, CMS has recognized the new Medicare drug benefit will only succeed if it builds upon proven approaches pioneered by PBMs. As the US Pharmacopeia’s Model Guidelines Expert Committee works to craft model formulary guidelines, we also urge them to embrace a similar, proven approach built around effective PBM participation.

“PCMA appreciates the Administration’s efforts and looks forward to providing additional input to ensure that seniors have access to a Medicare drug benefit that provides a choice of competing drug plans with access to the affordable medicines they need.”

Analysis Credits Expanded Use of Generics & Multi-Tier Formularies For 55 Percent Reduction in Rate of Growth of Rx Spending Since 1999

Washington, DC; 12.02.04 — A new analysis of health-care cost trends released today by the Center for Studying Health System Change suggests that an increased reliance on pharmacy benefit management tools â?? including expanded access to generic drugs and multi-tier pharmacy benefit structures â?? has helped to reduce the rate of growth in prescription-drug spending both in the first half of 2004 and more dramatically over the past five years, the Pharmaceutical Care Management Association (PCMA) said today. PCMA is the national association representing America’s pharmacy benefit managers (PBMs).

“While rising costs continue to challenge the entire health care system, one bright spot is the continued reduction in the rate of growth in prescription drug spending over the past five years. These data provide further evidence of the critical role that PBMs’ tools play in driving down prescription drug costs for consumers and purchasers,” said PCMA President Mark Merritt. “This analysis also has important implications for policymakers as they look to construct a workable Medicare drug benefit and rein in Medicaid spending on prescription drugs. The road to reducing prescription drug costs and expanding access goes through PBMs.”

The report released today by the Center for Studying Health System Change (HSC) and funded by the Employee Benefit Research Institute (EBRI) examines overall health spending in the first half of 2004 and its various components, including prescription drug spending trends. The report finds that while “prescription drugs continue to receive much of the blame for rising health care costs in the popular media,” “the reality is that prescription drug spending trends have slowed considerably from the high rates of growth in the late 1990s and early part of this decade.” These findings echo an earlier analysis conducted this year by researchers at the Centers for Medicare and Medicaid Services (CMS). Among the key findings from these data:

PBM cost-containment tools are effective at reducing the rate of growth in prescription drug spending. The analysis suggests that the reduction in the rate of growth in prescription-drug spending over the past five years reflects the increased use of generic drugs; three-tier pharmacy benefit structures; and employers’ and other purchasers’ use of increased copayments and coinsurance.
The rate of growth in prescription drug spending has declined by 55 percent over the past five years. From a peak growth rate of 19.5 percent in the latter half of 1999, the rate of growth in prescription drug spending has fallen dramatically over the past five years. In the first half of 2004, the rate of growth in prescription drug spending stood at 8.8 percent â?? a reduction of 55 percent since December 1999.
The rate of growth in prescription drug prices has been cut in half from a peak in July â?? December 2001. From a high of 6.0 percent in July â?? December 2001, the rate of growth in prescription drug prices has declined markedly over the past three years. For the first half of 2004, the rate of growth in prescription drug prices stands at 3.1 percent.
PBMs administer prescription drug plans for more than 200 million Americans with 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 disease management and physician and patient education. According to PricewaterhouseCoopers, PBMs are projected to save America’s working families, seniors, and employers $1.3 trillion dollars in prescription drug costs over the next decade.

The new analysis also examines the policy implications associated with rising health care costs. Noting that “little attention is being paid to the most important long-term driver of health care costs â?? new medical technology and its enthusiastic acceptance into mainstream medical practice,” the analysis suggests that a policy agenda focused on greater adherence to evidence-based medicine and increased research on medical effectiveness and technology assessments could help further address the challenge of rising health care costs.

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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