(Washington, DC)—Seeking to downplay the fact that just last week the Medicare program announced that seniors and disabled beneficiaries will enjoy lower-than-expected premiums and an array of private drug-plan choices in the upcoming Medicare prescription drug benefit, Families USA today instead repeated its call for a Veterans’ Administration (VA) model of drug delivery that, in the end, would severely restrict seniors’ access to drugs and result in a massive cost-shift to the private sector, the Pharmaceutical Care Management Association (PCMA) said today. PCMA is the national association representing America’s pharmacy benefit managers (PBMs).

“The VA model is a non-starter for the Medicare program and for anyone who cares about balancing prescription drug cost and access,” said PCMA President Mark Merritt. “Under the VA approach, America’s seniors and disabled beneficiaries would have severely restricted choices and the commercial marketplace would be subject to a massive cost shift as artificially low drug prices in Medicare forced working families, unions, and small businesses to pay more for their prescriptions. When utilized to their full potential, PBMs can help consumers and purchasers reduce prescription drug costs by an average of 25 percent and provide broad access to brand-name and generic drugs at thousands of retail and mail-service pharmacies nationwide.”

PCMA believes the report fails the credibility test in a wide range of areas:

The VA model would severely restrict seniors’ access to drugs, especially when compared to the Medicare drug discount card. The “solution” touted in the report â?? Medicare direct negotiation modeled after the Veterans’ Administration program â?? would lead to fewer drug choices for seniors. The VA national formulary requires access to prescription drugs in 34 classes. By contrast, commercial formularies typically cover drugs in 50 to 100 classes. The new permanent Medicare drug benefit requires coverage for about 146 categories of drugs. The current Medicare drug discount card requires discounts for 209 categories of drugs. ”

The report is misleading because it attempts to compare an insured pharmacy benefit with simple drug discounts available to consumers at the point-of-sale. Families USA is confusing the drug prices obtained under a permanent, insured pharmacy benefit â?? the VA — with the drug prices obtained under an interim 18-month voluntary program offering consumers discounts at the point-of-sale at their retail pharmacy. These differences make any valid comparison between the VA and the Medicare discount card program nearly impossible.

The VA model would lead to massive cost-shifting in other parts of the health care system, including the private marketplace. VA drug spending represents about one percent of all prescription drug spending. Medicare beneficiaries, by contrast, are estimated to account for about 40 percent of prescription drug spending. Because the VA drug spending represents only one percent of drug spending, cost shifting is kept to a minimum. Moreover, the VA pays fixed prices for drugs that are established by law. For example, brand-name drugs listed on the Federal Supply Schedule (FSS) are automatically provided to the VA at a 24 percent lower price than average private-sector price. Pulling 40 percent of all drug spending under the VA-style umbrella â?? and requiring an automatic 24 percent discount for brand-name drugs under the FSS â?? would represent a massive disruption in the marketplace and lead to billions of dollars of higher drug costs in other parts of the system.

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

Contact Information:
Phil Blando
202-207-3614