PCMA President Mark Merritt’s Testimony

Merritt: ‘Medicare Drug Plans Are Providing High Quality, Cost-effective Drug Coverage’

Plans Achieving Deeper-than-Expected Average Discounts of 27 percent

Cautions Committee about Policy Options That Could Undermine an Affordable Drug Benefit

(Washington, DC)—Testifying today before the House Ways and Means Committee on the Medicare prescription drug benefit, Pharmaceutical Care Management Association (PCMA) President Mark Merritt reported how Medicare drug plans have resolved early implementation challenges and are achieving better-than-expected premiums and discounts in Part D, the association said today. Mr. Merritt also cautioned the Committee about policy options that could undermine Medicare’s ability to maintain an affordable benefit.

PCMA is the national association representing America’s pharmacy benefit managers (PBMs), which administer prescription drug plans for more than 200 million Americans with health coverage provided through small businesses, Fortune 500 employers, health insurers, labor unions, and Medicare.

“Despite early challenges associated with the largest expansion in Medicare in more than forty years, the proven PBM tools utilized by Medicare drug plans are providing high quality, cost-effective drug coverage to almost 40 million Medicare beneficiaries,” said Mr. Merritt. “The vigorous competition between Part D plans is driving deeper-than-expected discounts of 27 percent for America’s seniors.”

While meeting and exceeding the challenges in Medicare Part D, Mr. Merritt also cautioned the Committee about policy options that could undermine Medicare’s ability to maintain an affordable benefit for beneficiaries, including:

Access to Generic Drugs. A recent PCMA analysis found that over the next five years, seniors and the Medicare Part D program could potentially save, at a minimum, more than $23 billion as at least 14 major brand-name drugs commonly used by seniors are slated to become available in generic form. However, these savings are at risk as special interest groups continue efforts aimed at undermining generic alternatives coming to market.

Mail-Service Pharmacy. The mail-service pharmacy option is an important tool for individuals managing chronic conditions and offers increased savings and patient compliance. According to an August 2005 report from the Lewin Group, mail-order pharmacies provide savings of an additional 10 percentage points compared to retail pharmacies and will save the system at least $78 billion through 2015. PCMA strongly encourages policymakers to resist efforts to erode this important cost-saving option for beneficiaries in Medicare Part D.

Drugstore Lobby Agenda. After initially opposing the new prescription drug benefit, the drugstore lobby is now pushing a legislation that would increase costs to the Medicare program and to beneficiaries, an agenda that includes:
Prompt Pay/MTM/Dispensing Fees. Legislation that would mandate increased generic fees, require pharmacy payment within 14 days or less; and place new “one-size-fits-all” restrictions on Medication Therapy Management (MTM) programs. This legislation would result in at least $9.4 billion in added costs to the Medicare program and to beneficiaries;

Collective Bargaining Rights for Independent Pharmacies. The independent pharmacy lobby is also pushing HR 1671, legislation that would provide independent pharmacies with unprecedented and sweeping collective bargaining rights both in Medicare and the commercial marketplace. This proposal is one of the most anti-consumer proposals introduced in this Congress and would provide pharmacists a license to collude to raise prescription drug prices in Part D and elsewhere in the system.

Elimination of the late enrollment penalty. As 2006 is a transition year, PCMA recognizes the flexibility from all stakeholders in Part D is critical. While not opposing elimination of the penalty in 2006, eliminating the penalty in coming years could be problematic.

Pharmacy Management Tools. As evidenced already in the benefit, pharmacy management tools are a proven avenue to lower drug costs and expanded access. The less flexibility given to Pharmacy and Therapeutics (P&T) committees in designing formularies and utilizing other proven tools, the less effective the formulary will be with respect to quality improvement and cost-savings.

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PCMA is the national association representing America’s pharmacy benefit managers (PBMs), which administer prescription drug plans for more than 200 million Americans with health coverage provided through small businesses, Fortune 500 employers, health insurers, labor unions, and Medicare Part D.

Contact Information:
Phil Blando, 202-207-3614
Charles Coté 202-207-3605