‘Ready, Set, Save!’ Campaign Highlights Federal Trade Commission Report Finding PBM Mail-Service Pharmacies More Cost-Effective than Chain Drugstores

(Washington, DC)—At a time when policymakers are debating how best to fund existing obligations â?? including the Medicare prescription drug benefit â?? and to address new priorities, the Pharmaceutical Care Management Association (PCMA) today kicked off a new advertising initiative to remind policymakers that Medicare mail-service pharmacies have the potential to save Medicare and seniors tens of billions of dollars over the next decade, the association said today. PCMA is the national association representing America’s pharmacy benefit managers (PBMs).

“Mail-service pharmacies are already projected to save the Medicare program and seniors $44 billion over the next decade. If used to their full potential, Medicare mail-service pharmacies could save seniors and the government an additional $42 billion in the same period,” said PCMA President Mark Merritt in announcing the new campaign. “It’s important that policymakers and the private sector do everything possible to encourage the use of Medicare mail-service pharmacies for those seniors who can benefit from it.”

While patients with short-term acute-care needs typically receive their prescriptions in the retail setting, those patients with chronic conditions such as high-blood pressure and high cholesterol could be better served by mail-service pharmacies. The mail-service pharmacy option offers increased savings and, since medications can be automatically delivered to the home as each fill ends, helps consumers better comply with their prescription regimen. Furthermore, mail-service pharmacies have pharmacists available over the phone 24/7 to assure consumers the ability to ask and get the answers for any questions they may have about their medication(s). Taken together, mail-service pharmacy satisfaction scores very high in terms of the condition of the drugs received, correct drugs delivered, and ease of refilling prescriptions, according to a 2004 survey of consumers in mail-service pharmacy. In 2006, Lewin estimates that about 24 percent of Medicare beneficiaries’ prescription drug expenditures will flow through mail-service pharmacies.

Overview of FTC Report

Section 110 of the Medicare Modernization Act (MMA) required the FTC to conduct the study to determine whether group health plans using “integrated” PBMs incur higher costs than plans using “non-integrated” mail-service pharmacies and/or retail pharmacies. During the Medicare prescription drug debate in Congress in 2003, retail pharmacies â?? relying on a retail industry-funded study by a group called LECG — sought to prohibit Medicare prescription-drug plan sponsors from being able to offer plans with a “captive” mail-service pharmacy benefit. As a compromise, the Medicare conferees agreed to an FTC study to examine this issue in further detail. The FTC voted unanimously, 4-0, to accept the findings in the report.

The FTC released its mail-service pharmacy study earlier this month. In conducting its report, the FTC examined 26 PBM contracts with plan sponsors as well as data from retail pharmacies. Among the key findings from the report:

Prescription drugs purchased at PBM mail facilities cost less than the same drugs purchased at non-PBM/retail owned facilities. For large PBMs, average total prices in 2002 and 2003 at PBM-owned mail-order pharmacies typically were lower than retail-owned mail-service pharmacies and chain drugstores. For a common basket of drugs dispensed in one month with the same-size prescriptions, mail prices were lower than retail prices at both large PBMs and retailer-owned PBMs

Generic substitution rates at PBM-owned facilities were generally equal to non-PBM/retail owned pharmacies. The FTC’s findings confirm an earlier analysis of 670 million pharmacy claims by Harvard Business School researchers that generic substitution at PBM-mail-service pharmacies and mail-service pharmacies owned by retail chains are essentially the same. The Harvard Business School findings were peer-reviewed and were featured on Health Affairs website in July 2004.

PBMs rarely switch drugs through therapeutic interchange programs and, when it occurs, reduces sponsors’ costs in a majority of cases.

The FTC flatly calls “without merit” the retail pharmacy industry’s charge that PBMs are engaging in “self-dealing” when they both administer the pharmacy benefits for a client as well as sell drugs to the client’s members via the PBM’s own mail-order pharmacy.

Contact Information:
Phil Blando
202-207-3614

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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.