(Washington, DC)—The Pharmaceutical Care Management Association (PCMA) issued the following statement today in response to the National Conference of Insurance Legislators’ (NCOIL) Health, Long-Term Care, and Health Retirement Issues Committee’s decision to indefinitely postpone consideration of model legislation that would have recommended adoption of expensive and unnecessary new anti-pharmacy benefit manager (PBM) regulations in each of the 50 states:

“As is so often the case, the longer experts focus on anti-PBM legislation, the more they realize it would increase health care costs with no corresponding upside to consumers. Following more than two years of extensive testimony and deliberation, the NCOIL Health Committee late yesterday afternoon voted overwhelmingly to indefinitely postpone consideration of model legislation that would have added unnecessary regulations to PBMs and increased prescription drug costs for consumers and payors.

“If adopted, this “Maine-style,” PBM fiduciary-disclosure model legislation could have been used in the states across the country as a boilerplate by the drugstore lobby and others seeking to push an anti-consumer agenda. However, once legislators realized this model would have increased costs by 10 percent and caused economic harm to those it was intended to protect, they soundly rejected the proposal.

“In recent years, numerous government and independent studies â?? including those from the Federal Trade Commission (FTC), Government Accountability Office (GAO), Congressional Budget Office (CBO), Department of Justice (DoJ), and the Centers for Medicare & Medicaid Services (CMS) â??have all confirmed the robust savings and increased access PBMs generate for consumers and public and private payors. According to PricewaterhouseCooopers (PwC), proven PBM tools, including the increased use of generics and the mail-service pharmacy option, generate savings averaging 25 percent.

“The decision by NCOIL is important because it is an organization of state legislators whose primarily focus is on public policy issues involving insurance legislation and regulation. PCMA is pleased with this important decision that is both pro-consumer and pro-business.”
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PCMA is the national association representing America’s pharmacy benefit managers (PBMs), which lower the cost of prescription drugs for more than 200 million Americans with coverage provided through Fortune 500 employers, health insurers, labor unions, and Medicare Part D

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

(Washington, DC)—A study funded by the drugstore lobby flies in the face of numerous government and independent research that document the increased savings of 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 lower the cost of prescription drugs for more than 200 million Americans with coverage provided through Fortune 500 employers, health insurers, labor unions, and Medicare Part D.

The study, “Comparison of Mail-Order with Community Pharmacy in Plan Sponsor Cost and Member Cost in Two Large Pharmacy Benefit Plans,” was funded by the drugstore lobby and is a limited analysis based on data from just two health plans in one state. Despite its bias, the drugstore lobby’s study does acknowledge that mail-service pharmacies save consumers between 29 and 37 percent on their prescription drug costs compared to retail pharmacies, which is consistent with other research.

“This drugstore lobby study flies in the face of literally every independent study not funded by the drugstore lobby,” said PCMA President Mark Merritt. “Employers, health plans, and government programs continue to embrace the mail-service pharmacy option because of the proven savings it delivers.”

The drugstore lobby’s study contains several methodological flaws that could substantially alter its findings. The most egregious flaw, which even the authors acknowledge, is that drug manufacturer rebates—which substantially lower drug costs for plan sponsors—are not included in the study.

Another major flaw is that generic dispensing rates, rather than generic substitution rates are examined. Generic dispensing rates vary based on differing types of drugs used through the retail and mail-service channel and whether these drugs are available in generic form. Based on independent, peer-reviewed research conducted by Harvard University using a sample more than 100 times larger than the drugstore lobby’s study, mail-service pharmacies had higher generic substitution rates than retail pharmacies.[1]

Numerous government and independent data has examined the increased savings provided by mail-service pharmacies. That research includes:

Federal Trade Commission (FTC). In a landmark 2005 report mandated by Congress, the FTC found that “after controlling for prescription size and drug mix differences, mail prices are typically lower than retail prices” and that “plan sponsors obtained larger discounts off the same reference drug price for prescriptions dispensed at mail than at retail.” FTC based its analysis on an unprecedented level of data subpoenaed from PBMs and retail pharmacies.[2]

Harvard University. Independent, peer-reviewed research conducted by Harvard University and published in 2004 by Health Affairs, analyzed some 670 million prescription drug claims and concluded that generic drug substitution rates at PBM mail-service pharmacies were slightly higher than at retail pharmacies.[3]

Centers for Medicare & Medicaid Services (CMS). Earlier this year, researchers from CMS found that generic drugs and mail-service pharmacies helped contribute to prescription drug-spending growth rate in 2005 slowing to its lowest growth rate in over a decade, rising just 5.8 percent.[4]

In addition, an analysis by the Lewin Group found that prescriptions dispensed through mail-service pharmacies cost approximately 10 percent less than equivalent retail pharmacy prescriptions and are projected to save consumers, Medicare, and health insurance plans in the commercial marketplace $85 billion over ten years.[5]

The drugstore lobby study, “Comparison of Mail-Order with Community Pharmacy in Plan Sponsor Cost and Member Cost in Two Large Pharmacy Benefit Plans,” was conducted by researchers at the University of Texas and published in the March 2007 issue of the Journal of Managed Care Pharmacy.

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[1] Wosinska, M., Huckman, R.S., “Generic Dispensing and Substitution in Mail and Retail Pharmacies,” Health Affairs, July 2004. Available at http://content.healthaffairs.org/cgi/reprint/hlthaff.w4.409v1

[2] Federal Trade Commission, “Pharmacy Benefit Managers: Ownership of Mail Order Pharmacies,” September, 2005, Available at http://www.ftc.gov/opa/2005/09/pharmbenefit.htm

[3] Wosinska, M., Huckman, R.S., “Generic Dispensing and Substitution in Mail and Retail Pharmacies,” Health Affairs, July 2004. Available at http://content.healthaffairs.org/cgi/reprint/hlthaff.w4.409v1

[4] Catlin, A., et. al., “National Health Spending In 2005: The Slowdown Continues,” Health Affairs, 26, no. 1 (2007): 142-153. Available at http://content.healthaffairs.org/cgi/content/abstract/26/1/142

[5] The Lewin Group, “Mail-Service Pharmacy Savings and the Cost of Proposed Limitations in Medicare and the Commercial Sector,” prepared for PCMA, September, 2006. Available at http://pcmanet.org/newsroom/2006/pr_09_06/9.13.06.htm

PCMA is the national association representing America’s pharmacy benefit managers (PBMs), which lower the cost of prescription drugs for more than 200 million Americans with coverage provided through Fortune 500 employers, health insurers, labor unions, and Medicare Part D

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