(Washington, DC)—Today’s announcement from researchers at the Centers for Medicare and Medicaid Services (CMS) that prescription drug spending slowed to its lowest growth rate in the past decade — driven down in large part by increased reliance on generic drugs and mail-service pharmacies — marks a turning point in the prescription drug debate and demonstrates clear pathways for policymakers and purchasers to contain costs and expand access to prescription drugs in the years ahead, the Pharmaceutical Care Management Association (PCMA) said today.

PCMA is the national association representing America’s pharmacy benefit managers (PBMs). PBMs administer prescription drug plans for more than 200 million Americans with health coverage provided through large and small businesses, health insurers, labor unions, and Medicare.

“These data are the testament to PBMs’ work over the past decade to change the way consumers, clinicians, and purchasers think about prescription drugs,” said PCMA President Mark Merritt. “It’s no secret that the old system - run by and for drug makers and drugstores - was broken. By providing consumers and purchasers with alternatives to the status quo, whether through increased access to generic drugs or by filling prescriptions through a mail-service pharmacy, PBMs have been validated as a proven source for lowering prescription drug costs.”

The new prescription drug data are contained in a report, “National Health Spending in 2004: Recent Slowdown Led by Prescription Drug Spending,” authored by researchers from the Centers for Medicare & Medicaid Services and published in the new edition of Health Affairs. Among the key findings:

Prescription drug spending in 2004 slowed to its lowest growth rate in the past 10 years, rising 8.2 percent. Overall, health spending grew in 2004 at a 7.9 percent clip, down from 8.2 percent in 2003.

The authors cite four key reasons for the slowdown in prescription drug spending: Rapid growth in the use of lower- price generic drugs; Increased use of over-the-counter medications; A shift toward greater mail-order dispensing; and Reduce consumption of certain drugs over safety concerns.

Increased use of mail-service pharmacies corresponds to lower overall drug trend. While mail-order grew 13.6 percent in 2004, compared to retail growth of just 2 percent, overall drug trend declined to the lowest level in the past decade. In 2004, mail-order accounted for approximately 17 percent of total prescription drug sales. According to the report, “in the past three years, growth in drugs dispensed through mail accelerated, while growth in drugs dispensed through retail outlets decelerated.” In addition, the researchers note that in mail- order settings, pharmacists have more time to switch to lower- cost drugs and to those generating larger rebates. The researchers find that the lower co-pays available in mail-order also serve as an enticement to consumers.

The rate of growth of drugs in private health insurance spending fell to 6.5 percent in 2004, much lower than the 13.3 percent rate seen from 2000-2002.

Spending on prescription drugs in Medicaid slowed in 2004, although its rate of growth appears to remain above that for private-health insurance plans. Nonetheless, researchers noted that many tools contributed to a decline in Medicaid prescription drug spending, including prior authorization, generic substitution, negotiating higher rebates, and multi-state purchasing pools. Many of these tools were pioneered by PBMs in private health plans.

As important as these data are, PCMA also cautioned consumers, policymakers, and purchasers that these gains are by no means assured.

Merritt added, “While these new data are welcome news, policymakers should not assume they are assured in the coming years. Lobbyists for the brand-name drug makers, chain drugstores, trial lawyers and others are working to undermine many of the tools PBMs have used to reduce the rate of growth in prescription drug spending for consumers and purchasers. In the coming year, PCMA cautions policymakers to resist special- interest proposals that would turn back the clock to the days of double-digit increases in prescription drug spending.”

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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
Charles Coté 202-207-3605

Medicare Drug Discounts Real & Holding Steady

Medicare Drug Discounts Real & Holding Steady

Medicare Drug Discounts Real & Holding Steady

Medicare Drug Discounts Real & Holding Steady

Medicare Drug Discounts Real & Holding Steady

MHCC Finds Maryland Lags in Use of Mail-Service Pharmacies Because of Retail Pharmacy Protections

(Washington, DC)—With Maryland lagging the nation in its use of lower-cost mail-service pharmacies because of state laws protecting old-style drugstores from more competition, a new report prepared by the Maryland Health Care Commission and the Maryland Insurance Administration suggests that some Maryland consumers and employers could see their prescription drug costs reduced by $10 million to as much as $32 million annually if the state’s anti-mail service pharmacy laws were changed, 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 with health coverage provided through large and small businesses, health insurers, labor unions, and Medicare.

“For anyone interested in common-sense approaches to lowering Maryland’s prescription drug tab, this report should be a wake-up call. Changing state law to expand access to mail-service pharmacies would mean lower prescription drug costs for Maryland consumers and businesses,” said PCMA President Mark Merritt. “Mail-service pharmacies typically offer consumers and purchasers an additional 10-percent savings compared to retail pharmacies, 24-hour access to pharmacists, and more privacy and convenience. Regrettably, current law protects Maryland’s drugstores from more competition and consumers and employers are paying more for prescription drugs as a result.”

The new report, “Mail-Order Purchase of Maintenance Drugs: Impact on Consumers, Payers, and Retail Pharmacies,” was mandated in 2005 by Maryland SB 885. The law required the Maryland Health Care Commission (MHCC) and the Maryland Insurance Administration, in consultation with the Maryland Board of Pharmacy, to study how the use of increased mail-service pharmacy would impact consumers and retail pharmacies. Importantly, the report only examined the effect improved access to mail-service pharmacies would have on consumers with coverage through fully-insured plans that are regulated by the state of Maryland. Prescription drug spending through fully-insured plans represents about one-fourth of total prescription drug spending in Maryland. Most insured Marylanders are in health plans that are self-insured and governed by a separate federal law, the Employee Income Retirement Security Act (ERISA).

Among the report’s key findings:

Maryland lags the nation in its use of mail-service pharmacies because of retail pharmacy protections. In Maryland, about 14 percent of prescription drug spending ($600 million) is spent through mail-service pharmacies. Nationally, the share is over 18 percent. According to the report, a key reason that Maryland lags the nation in use of mail-service pharmacies is that “retail pharmacy protections have contributed to a lower use of mail-order in Maryland.” Maryland law currently prohibits a third-party payer from charging consumers lower copayments for mail-service pharmacies than for retail pharmacies â?? even though other data find that the mail-service pharmacy option is typically 10 percent more cost effective than retail pharmacies.

If Maryland consumers used mail-service pharmacies at a rate comparable to national trends, Maryland consumers in state-regulated, fully-insured plans could save $7 million to $16 million annually on prescription drug costs. The MHCC conducted simulations to estimate the impact of increased mail-service pharmacy on consumers with coverage through state-regulated, fully-insured plans. The MHCC estimates that these consumers could see out-of-pocket prescription drug costs reduced by 2 to 6 percent through increased use of mail-service pharmacies. The cost savings are attributed to reduced copayments.

If Maryland’s third-party payers and carriers were able to take better advantage of mail-service pharmacies, the MHCC finds that employers and health plans would realize an additional discount of 5 to 10 percent on prescription-drug costs.

More mail-service pharmacy use by Maryland consumers and employers would reduce revenue to retail pharmacies in a range of 1 to 3 percent, but could be substantially dampened by the overall growth in prescription drug sales. The report estimates that supermarkets and mass retailers such as Wal-Mart would be most affected by increased mail-service pharmacy use in Maryland. Independent pharmacies would be less impacted because consumers are more likely to fill maintenance drugs at mass retailers and supermarkets. The report’s authors also note that “it should be emphasized that the financial impact on retail pharmacies described here will be dampened and possibly substantially so, by the overall growth in sales of prescription drugs.”

A complete copy of the report can be found at: http://mhcc.maryland.gov/legislative/mailorderrpt.pdf

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.