Higher Costs, Fewer Choices Likely Result of Medicare Direct Negotiation

PCMA Survey of 25 Drugs Most Often Prescribed to Seniors Finds PBMs Negotiating Discounts Of 31 Percent at Retail, 45 Percent through Mail-Service Pharmacies

(Washington, DC)—Charging that Families USA’s new report on Medicare drug prices “doesn’t add up,” the Pharmaceutical Care Management Association (PCMA) today issued a competing report finding that Families USA’s report fails to disclose that replicating a Veterans Administration-style approach to Medicare drug pricing would lead to higher costs for working families, unions, and small businesses in other parts of the system and limit seniors’ access to covered drugs and pharmacies. PCMA is the national association representing America’s pharmacy benefit managers (PBMs), which administer prescription drug plans for 200 million Americans.

In sharp contrast to the limited choices and higher costs associated with Families USA’s approach, PCMA’s own recent survey of the 25 drugs most commonly prescribed to seniors finds PBMs are negotiating deep discounts in Medicare part D. PDPs will save the Medicare program and its beneficiaries an average of 31 percent on medications purchased at retail pharmacies and 45 percent on medications purchased at mail-service pharmacies compared to the usual and customary prices that retail pharmacies charge to seniors with no drug coverage.

These findings are included in a new PCMA report, Higher Costs, Fewer Choices: What Families USA’s New Report on Medicare Drug Prices Isn’t Telling America’s Seniors & Disabled.

“Families USA’s report on Medicare drug prices doesn’t add up,” said PCMA President Mark Merritt. “Families USA is presenting a false choice. Medicare beneficiaries would never accept a drug benefit with sharply reduced drug choices and very limited access to pharmacies. Policymakers recognized this political reality and devised a program providing seniors with choice and competition. For these reasons, seniors enrolling in Medicare part D are finding a choice of plans providing meaningful discounts and wide access to the drugs they need.”

Four Reasons Why the Families USA Report Doesn’t Add Up:

PCMA believes the Families USA report fails the credibility test on a number of fronts:

The Families USA report endorses government-price controls over private-market competition as a means to lowering drug costs, but fails to reveal that GAO and others have cautioned this approach could actually lead to increased prescription drugs costs for hundreds of millions of Americans in Medicare and the commercial marketplace.

The Families USA report fails to mention that Medicare beneficiaries would see sharply reduced drug choices if Medicare replicated VA-style direct purchasing.

The Families USA report also omits limitations inherent in the VA system, such as limited access to retail pharmacies, that make replicating it in the Medicare program impossible.

Medicare part D plans are providing seniors with an average of 31 percent on medications purchased at retail pharmacies and 45 percent on medications purchased at mail-service pharmacies. PBMs Negotiate Significant Savings for Medicare Part D

###

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

Merritt: AHRQ Initiative Represents ‘Emerging Consensus’ That Value-Based Purchasing Can Help Improve Outcome, Lower Costs

(Washington, DC)—Yesterday’s publication of a first-ever Comparative Effectiveness Review by the Agency for Healthcare Research and Quality’s (AHRQ) new Effective Health Care Program is an important step forward in helping consumers, clinicians, and purchasers better evaluate competing therapies and make informed health care decisions, the Pharmaceutical Care Management Association (PCMA) said today. PCMA is the national association representing America’s pharmacy benefit managers (PBMs), which administer prescription drug plans for 200 million Americans.

AHRQ’s Effective Health Care Program released its first report, Comparative Effectiveness of Management Strategies for Gastroesophageal Reflux Disease, yesterday. According to AHRQ’s review, a class of prescription drugs, proton pump inhibitors (PPIs), can be as effective as surgery for management of gastroesophageal reflux disease (GERD). GERD results in an estimated $10 billion annually in direct health care costs. The report reviewed various treatments for GERD, including over-the-counter medicines, PPIs, surgery, and endoscopic procedures. This GERD report is the first of 10 reports to be issued by AHRQ’s Effective Health Care Program.

“PCMA applauds AHRQ for putting forward useful information that consumers, clinicians, and purchasers can all use to evaluate competing therapies and better utilize scarce health care dollars,” said PCMA President Mark Merritt. “AHRQ’s efforts are part of a broader emerging consensus that value-based purchasing will lead to better health outcomes, reduce variations in care, and provide for more effective targeting of health care resources. PBMs have been in the vanguard of incorporating comparative effectiveness and other evidence-based medicine tools into the prescription-drug benefit arena. AHRQ’s new initiative will only help further these goals, both in the commercial marketplace and in the Medicare and Medicaid programs.”

PBMs rely upon panels of independent, clinical experts, called Pharmacy & Therapeutics (P&T) committees, to determine which drugs are most effective for specific needs. P&T committees are largely independent providers and include a variety of specialist physicians, pharmacists, and others with specific clinical knowledge of drugs and pharmacotherapy. These committees serve in an evaluative, educational, and advisory capacity in matters concerning formulary development and management. Primarily, this capacity is served in evaluating drugs for safety and efficacy. Development and maintenance of formularies is an ongoing activity, as they must be continually updated to keep pace with new therapies, recent evidence from clinical research, changes in medical practice, and FDA guidance. When drugs are determined to be therapeutically equivalent, PBM get the drug manufacturers of those respective drugs to compete and offer discounts in exchange for better placement on formularies. According to PricewaterhouseCoopers, PBMs generate discounts averaging 25 percent.

AHRQ’s Effective Health Care Program’s first report, Comparative Effectiveness of Management Strategies for Gastroesophageal Reflux Disease, can be found at:

http://effectivehealthcare.ahrq.gov/synthesize/reports/finalGERD.cfm

###

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

Contact Information:
Phil Blando
(202) 207-3614

Medicare Could Save of $86 Billion If Mail-Service Pharmacies Are Used to Full Potential

(Washington, DC)—A prescription-drug survey released today by Gallup, which shows that one in three Americans takes prescription drugs to treat a “long-term illness or condition,” is a clear signal that policymakers should work harder than ever to ensure that everyone has full access to and awareness of the savings and convenience offered by the mail-service pharmacy option, the Pharmaceutical Care Management Association (PCMA) said today. PCMA is the national association representing America’s pharmacy benefit managers (PBMs), which administer prescription drug plans for more than 200 million Americans.

The new Gallup poll on prescription drugs finds that more than half â?? 52 percent â?? of Americans are taking prescription drugs and, that of these, two-thirds are doing so to treat a long-term illness or condition. Fully one in three Americans â?? which translates to almost 100 million individuals — overall is taking prescription drugs to treat a long-term illness or condition. Not surprisingly, Gallup finds that seniors are the highest utilizers of prescription drugs, with 9 in 10 seniors taking at least one prescription.

“For those using chronic medications, mail-service pharmacies offer a 10 percent discount, home delivery, greater dispensing accuracy and professional pharmacists available 24/7 for consultation,” said PCMA President Mark Merritt. “Used to its full extent, the mail-service pharmacy option could save the Medicare program and seniors $86 billion over the next decade.”

The Gallup data provide a compelling case to policymakers to make the mail-service pharmacy option more accessible to working families, the disabled, and seniors. While patients with short-term acute-care needs typically receive their prescriptions in the retail setting, those patients with chronic conditions such as high-blood pressure and high cholesterol could be better served by the home delivery option offered by mail-service pharmacies. The mail-service pharmacy option saves about 10 percent when compared to retail pharmacies and provides 90-day prescriptions delivered right to the consumer’s doorstep. The mail-service pharmacy option is ideal for consumers taking prescription drugs to treat a long-term illness or condition. Furthermore, mail-service pharmacies have pharmacists available over the phone 24/7 to assure consumers the ability to ask and get the answers for any questions they may have about their medication(s).

New Study — Mail Service Pharmacy Could Save Medicare $86 Billion

According to an August 2005 report by the Lewin Group, the mail-service pharmacy option has the potential to save Medicare as much as $86 billion dollars on prescription drug costs over the next decade if it is used to its full potential. Among the key findings from the Lewin study:

�· Lewin estimates that mail-service pharmacies provide savings of 10 percent compared to retail pharmacies based on a review of the published evidence.

�· At its current level of market penetration, mail-service will save the health care system $78.9 billion in drug expenditures from 2006-2015. This includes $44.3 billion for Medicare and $34.6 billion for the commercial sector.

�· If all prescriptions that could appropriately be filled through mail-service were filled through mail-service, Lewin estimates that drug expenditures would be reduced by an additional $99 billion from 2006-2015. This includes $42.2 billion for Medicare and $56.8 billion for the commercial sector.

�· The cumulative savings that mail-service pharmacies could provide the health system during the next ten years amounts to $177.9 billion, based on existing and potential mail-service market penetration.

The new Gallup prescription-drug poll

Lewin Study: “Mail-Service Pharmacy Savings: A Ten-Year Outlook for Public and Private Healthcare Purchasers

###

The Pharmaceutical Care Management Association (PCMA) is the national trade association representing America’s pharmacy 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)—Mark Merritt, President and Chief Executive Officer of the Pharmaceutical Care Management Association (PCMA), issued the following statement in response to videotaped remarks made today by Federal Reserve Chairman Alan Greenspan on budget policy and the future of Medicare to the Federal Reserve Bank of Philadelphia Policy Forum. PCMA is the national association representing pharmacy benefit managers (PBMs), which administer prescription drug plans for 200 million Americans:

“Federal Reserve Chairman Alan Greenspan is right to focus on the need for Medicare to take advantage of the tools available which can improve quality and rein in heatlh spending. Although PBMs, which are central to administering the new Medicare prescription drug benefit, will save seniors 31 percent on drugs at the retail counter and 45 percent for those choosing the mail service pharmacy option, policymakers can do more to generate even greater savings in the future.

“In particular, Chairman Greenspan’s assertion that health information technology is key to improving clinical best practices and reducing health care administrative costs is a clarion call for the need for system-wide adoption of one the PBM industry’s greatest — and largely untapped â?? innovations: electronic prescribing technology. Creating one national, uniform e-prescribing standard and allowing payers to provide the technology and other incentives necessary to encourage providers to actually use this technology will save billions of dollars, and, more importantly, save lives.

“More broadly speaking, it is critical that policymakers embrace the proven tools PBMs have used successfully in the commercial market to lower prescription drug costs, expand access, and promote quality. PBMs rely on a wide range of tools to help health insurers, labor unions, and small businesses lower prescription drug spending, including multi-tier formularies, preferred pharmacy networks, pharmacy & therapeutic committees, generic substitution, step therapy, prior authorization, mail-service pharmacies, and many other tools.

“While many of these tools will be used to improve the quality and affordability of the new Medicare drug benefit, many special interests continue to try and undermine them — most notably the retail pharmacy and drug manufacturer lobbies, and the trial bar. While standing up to these interests can be difficult, policymakers who do so will be rewarded with a better, more affordable drug benefit that will put seniors — and the Medicare program itself — in a much better position to face the future.”

Full text of Chairman Greenspan’s remarks

Contact Information:
Phil Blando, 202-207-3614
Charles Coté 202-207-3605