FTC Letter on NC HB 1374

(Washington, DC)—North Carolina is the latest state to reject a one-size-fits-all PBM fiduciary and/or disclosure proposal in 2006, the Pharmaceutical Care Management Association (PCMA) said today. In all, 21 states have now rejected PBM fiduciary and/or disclosure bills in 2006. 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 small businesses, Fortune 500 employers, health insurers, labor unions, and Medicare Part D.

The North Carolina legislature adjourned on July 28, 2006 without taking action on HB 1374. The measure died in the Committee on Finance without any votes being taken â?? a clear sign of a lack of constituency for the bill. Proposals like HB 1374 would increase costs to consumers and payors without any corresponding benefit. According to an analysis by PricewaterhouseCoopers, similar one-size-fits-all proposals would increase health care costs in North Carolina by 7 percent, or more than $6 billion by 2014. Conversely, PricewaterhouseCoopers has estimated that PBM tools and techniques are projected to save North Carolina consumers and employers $37 billion on prescription drug costs during 2005-2014.

PCMA believes strongly that the marketplace is better positioned to resolve these issues than through a one-size-fits-all legislative and regulatory approach. In recent years, private and public payors throughout the system have worked closely with PBMs to arrive at optimal levels of disclosure in contracting. A competitive marketplace â?? not legislative dictates â?? is providing payors with the information they need to make informed contracting and purchasing decisions about prescription drug benefits.

The North Carolina legislature runs on a two-year cycle, meaning HB 1374 was under consideration during the 2005-2006 legislative session. In July 2005, the US Federal Trade Commission’s Office of Policy Planning, Bureau of Competition, and Bureau of Economics issued a comment letter on HB 1374. The FTC staff found that “HB 1374 is likely to limit a PBM’s ability to reduce the cost of prescription drugs without providing consumers any additional protections.”

Similarly, in July 2004, at the end of an exhaustive two-year long process, the FTC and the Department of Justice (DoJ) issued a landmark report, “Improving Health Care: A Dose of Competition,” examining competition in the health care marketplace. In the report, the FTC and DoJ made six key recommendations for improving competition in health care, including one related to PBM disclosure. Specifically, the FTC/DoJ recommended:

“States should consider the potential costs and benefits of regulating pharmacy benefit manager (PBM) transparency. In general, vigorous competition, rather than regulation, in the marketplace for PBMs is more likely to arrive at an optimal level of transparency. Just as competitive forces encourage PBMs to offer their best price and service combinations to health-plan sponsors to gain access to subscribers, competition should also encourage disclosure of the information that health-plan sponsors require to decide which PBM to contract.”

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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 small businesses, Fortune 500 employers, health insurers, labor unions, and Medicare.

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

(Washington, DC)—The Pharmaceutical Care Management Association (PCMA) issued the following statement in response to yet another attack on Medicare Part D by the drugstore industry lobby:

“Regrettably, the drugstore industry lobby continues to present a pauper’s faÃ?§ade to policymakers and the news media, while, in reality, drugstores are enjoying robust earnings, store expansions, and increased pharmacy sales under Medicare Part D.

For decades, the drugstore industry profited handsomely from seniors without drug coverage and the uninsured. Seniors and the uninsured paid some of the highest drug prices of all at the retail pharmacy counter, with drugstores earning their highest gross-profit margins — 40 percent or more â?? on prescriptions paid by uninsured consumers. With the advent of Medicare Part D, individual seniors now have the protection of drug plans negotiating on their behalf against the $174 billion drugstore industry. Seniors are seeing deep discounts averaging 27 percent, lower-than-expected premiums, and are increasingly satisfied with the new drug benefit.

“Despite the rhetoric coming from their assorted lobbying groups, the drugstore industry is flourishing under Medicare Part D:

Ã?· In recent weeks, the nation’s large drugstore chains have beat analyst expectations and have reported strong pharmacy sales increases. One of the nation’s largest chain drugstores reported opening 39 stores in July alone and acquired 77 additional stores.

�· Over the past six months alone, national chain drugstores have seen their stock valuations increase between 10 and 25 percent.

Ã?· Independent pharmacies continue to grow and their owners rank among the nation’s top four-percent wage earners.

Ã?· Pharmacy is one of the nation’s hottest professions. Fueled by this growing demand, the average pharmacist compensation will top $98,000 in 2006. Since 2004, the average total cash compensation for staff pharmacists has increased by nearly $10,000.

“PCMA believes strongly these data hardly portray a drugstore industry in distress. It’s time to reconcile the drugstore lobby’s rhetoric inside the Beltway with reality. Drugstores are flourishing under Medicare Part D.”

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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 small businesses, Fortune 500 employers, health insurers, labor unions, and Medicare.

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