PricewaterhouseCoopers Estimates PBMs to Save $693 Billion Dollars
On Prescription Drug Costs for Medicare Beneficiaries in Private Plans from 2005-2014

In 2005, PBM Savings Translate to $937 per Medicare Beneficiary in Private Plans;
$198 per Under-65 Individual in Commercial Plans in ‘05;

Exposed: Human & Economic Cost of Proposals Limiting PBM Management Techniques; Billions of Dollars in Added Drug Costs, Hundreds of Thousands More Uninsured

Washington, DC; 07.14.04 — Launching a new front in the fight for affordable, quality prescription drugs for America’s working families, seniors, and employers, the Pharmaceutical Care Management Association (PCMA) today released a landmark analysis from PricewaterhouseCoopers (PwC) documenting how pharmacy benefit management techniques will save $1.3 trillion dollars on prescription drugs costs over the next decade. The study also includes data about how the lack of benefit management techniques would contribute to increased prescription drug costs, rising insurance premiums, and hundreds of thousands more uninsured individuals. PCMA is the national association representing pharmacy benefit managers (PBMs).

” PricewaterhouseCoopers’ new data confirms that PBMs are driving down the cost of prescription drugs for working families, seniors, and employers. With an estimated $1.3 trillion dollars in savings over the next decade, PBMs are helping to free up resources that can be used to enrich existing benefits, cover the uninsured, create new jobs, and fund other priorities,” said PCMA President & CEO Mark Merritt. “At the same time, these data should be a sobering reminder to policymakers about the consequences of undermining PBMs’ tools and techniques. Without PBMs and the tools they use to save money, the cost of a Medicare prescription drug benefit is likely to skyrocket and consumers and employers would see much higher prescription drug costs.”

KEY FINDINGS

In the new analysis, PricewaterhouseCoopers estimates the following:

From 2005-2014, total savings from pharmacy benefit management techniques will total about $1.3 trillion dollars.
In Medicare, in 2005, pharmacy benefit management activities will reduce prescription drug costs by $937 per Medicare beneficiary in private plans, or about $18 billion. From 2005-2014, pharmacy benefit management is estimated to save $693 billion on Medicare-related spending in private plans. These data apply to beneficiaries with prescription drug coverage provided through private plans, including Medicare Advantage health plans, Medicare supplemental policies, and employer-sponsored retiree coverage.
On average, pharmacy benefit management reduces prescription drug costs by 25 percent compared to retail purchases with no pharmacy benefit management support. Depending upon the intensity of pharmacy benefit management sought by an employer, health plan, Taft-Hartley union plan, or state and federal government, the savings can range from 40 percent to 15 percent.
In 2005, pharmacy benefit management will reduce drug costs by $198 per under-65 individual in private plans, or about $36 billion. Overall, in 2005, pharmacy benefit management activities will reduce drug costs by $53 billion for both Medicare and non-Medicare drug spending, or $268 per enrollee.
The National Human & Economic Cost of Proposals Limiting
The Use of PBM Cost Management Techniques

As part of their analysis, PricewaterhouseCoopers reviewed a range of anti-PBM legislative proposals that have been introduced in various states and developed a list of the most common ones, especially those that would appear to be the most far reaching in terms of impact on PBM savings. PwC’s estimates are consistent with the overall savings generated by PBMs and assume enactment on a national scale. The full report, includs background, cost impact analysis, and methodology.

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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