PBMs Saving Retirees $937 Dollars Each on Prescription Drug Costs in 2005 Alone

Implications Foreseen for Medicare Prescription Drug Benefit

Washington, DC; 12.14.04 — As large employers work hard to maintain employer-sponsored retiree health benefits â?? including prescription drug coverage â?? a new survey out today finds that many employers are choosing pharmacy benefit management tools in an effort to balance prescription drug cost, access, and quality for retirees, the Pharmaceutical Care Management Association (PCMA) said today. PCMA is the national association representing America’s pharmacy benefit managers (PBMs).

“More than ever, large employers are looking to PBMs to offer their retirees access to clinically proven, cost-effective drug-benefit options, including generics and mail-service pharmacies,” said PCMA President Mark Merritt. “By offering employers a range of tools and techniques to choose from in managing drug benefits, PBMs are helping them drive down the cost of prescription drugs by an average of 25 percent, improve quality, and stretch scarce health care dollars.”

PBMs administer prescription drug plans for 200 million Americans with drug coverage provided through labor unions, employers, health insurers, federal and state employee-benefit plans, Medicare Advantage plans, and state Medicaid programs. By requiring drug manufacturers and retail pharmacies to compete based on cost and quality, PBMs are able to drive down the cost of prescription drugs by an average of 25 percent.

According to a recent analysis by PricewaterhouseCoopers, in 2005, pharmacy benefit management activities are estimated to reduce prescription drug costs by $937 per Medicare beneficiary in private plans, including Medicare Advantage health plans and in employer-sponsored retiree benefit plans. Overall in 2005, pharmacy benefit management activities are estimated to save $18 billion in Medicare-related spending in Medicare Advantage and in retiree-sponsored plans.

According to new data released by the Kaiser Family Foundation and conducted by Hewitt Associates, 65 percent of America’s large employers are relying upon PBMs to administer prescription drug plans for their retirees that are 65 years of age and older. The vast majority â?? 98 percent â?? of employer-sponsored retiree benefit plans offer prescription drug coverage and, more than ever, are relying upon a wide range of proven PBM tools and techniques, including multi-tier formularies, step therapy, therapeutic interchange, and prior authorization. With respect to mail-service pharmacy, 94 percent of large employers offer their retirees an integrated mail-order and retail pharmacy benefit. Just six percent of surveyed employers offer a retail-only pharmacy benefit.

These data also have implications as policymakers continue to implement the new Medicare prescription drug benefit.

“Policymakers should preserve the full range of proven PBM tools and techniques in the new Medicare prescription drug benefit,” added Mr. Merritt. “Without effective PBM participation, program costs will soar and seniors will be forced to pay higher premiums and out-of-pocket costs with no corresponding benefit.”

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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