CBO: Public Disclosure Could Encourage ‘Tacit Collusion’ by Drugmakers, Higher Drug Prices

(Washington, DC)—A new analysis from the Congressional Budget Office (CBO) finding that public disclosure of drug-pricing information could potentially increase the cost of the Medicare prescription drug benefit by billions of dollars and facilitate “tacit collusion” among drug manufacturers underscores that one-size-fits-all public disclosure would only serve to increase drug costs and empower drugmakers to charge higher prices, 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.

“Medicare drug plans currently offer a tremendous amount of pricing transparency in Part D, including making specific drug prices available to beneficiaries via the CMS website,” said PCMA President Mark Merritt. “It is critical to differentiate between the right kind of disclosure which benefits consumers and the wrong kind, which empowers drugmakers to drive up costs.”

In its analysis, CBO examined the effects of public disclosure of drug-pricing information and arrived at three conclusions:

1. Public disclosure will increase Medicare costs. While declining to provide a specific figure, CBO simply acknowledges that the increased costs associated with public disclosure would “very likely be less than $10 billion.”

2. Public disclosure will undermine competition. CBO notes that “the forces of competition will thus tend to result in larger rebates and lower net prices” and that “the revelation of rebates to PDPs would create pressure to reduce those rebates, which would tend to increase costs for both the Medicare program and, on average, for enrollees.”

3. Public disclosure could encourage “tacit collusion” among drug manufacturers. CBO finds that the revealing Part D rebates would allow drugmakers to engage in “tacit collusion” with the net effect being to “reduce average rebates for the PDPs and to raise net prices.”

Mr. Merritt added, “Once again, CBO has reaffirmed that there are substantial costs associated with one-size-fits-all public disclosure of drug-pricing information in Medicare Part D. At a time when policymakers are looking to fund key health care priorities and adhere to PAYGO, the cost of public disclosure of drug-pricing information would make that challenge even more difficult.”

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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