Washington, DC; 09.28.04 — Mark Merritt, President of the Pharmaceutical Care Management Association (PCMA) released the following statement regarding the ongoing debate on Medicare’s draft formulary model guidelines issued by the US Pharmacopeial Convention (USP). PCMA is the national association representing America’s pharmacy benefit managers (PBMs):

” In the current debate over the USP formulary recommendations, some advocacy groups assert that any Medicare formulary must include hundreds and hundreds of narrow therapeutic drug categories and classes—virtually assuring that each and every drug on the market would be covered without regard to clinical evidence and cost-effectiveness. In reality, this approach does not reflect standard—and successful—approaches widely used the commercial marketplace, where formularies with 50 to 100 meaningful therapeutic classes provide access to a broad range of prescription drugs while encouraging price competition among therapeutically similar products.

” The reason PBMs were envisioned as playing a central role in the new Medicare drug benefit is simple: PBMs have proven successful in the commercial market at managing drug benefits for more than 200 million Americans, including two-thirds of seniors. PBM clinical and cost-management tools—including formularies—provide broad access to drugs while reducing costs an average 25 percent, according to PricewaterhouseCoopers. Implementing a Medicare formulary with hundreds and hundreds of therapeutic classes would, in fact, jeopardize the long-term viability of the program and put seniors’ access to medications at risk.

“There are five basic reasons Medicare should look to what has worked in the commercial marketplace as the best pathway to affordability and access in the new Medicare drug benefit:

Plan sponsors will compete for enrollees based on attractive offerings, including high-quality formularies. Information on drugs covered in the formulary will be readily available to new and existing enrollees. Plans will have strong incentives to cover widely used products in order to attract and retain enrollees.
Plan sponsors will rely on clinical evidence first and foremost when developing formularies. Independent, expert panels of clinical experts known as Pharmacy and Therapeutics Committees will guide formulary development. A P&T Committee’s primary consideration in the development of a formulary is clinical appropriateness. In cases where there are therapeutically equivalent drugs, the PBM will evaluate the most cost-effective alternative, which will be recommended for placement on the formulary.
As proven in the commercial marketplace, formularies provide broad access to prescription drugs. According to a 2003 study by the Government Accountability Office, competitive PBM-administered programs offered to federal employees generally featured ‘non-restrictive drug formularies’ that included ‘coverage of most drugs.’ In short, enrollees generally enjoyed ‘unrestricted access to prescription drugs,’ according to GAO.
Effective formularies are essential to maintaining an affordable drug benefit. In 2005, pharmacy benefit management activities—including formularies—will reduce prescription drug costs by $937 per Medicare beneficiary in private plans, or about $18 billion, according to PricewaterhouseCoopers. 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.
The Centers for Medicare and Medicaid Services (CMS) will have extensive oversight of the new Medicare drug benefit, including approving each drug plan’s formulary, before it can participate in Medicare. The agency stated in the rules proposed to govern the new benefit that “it is our expectation that plans’ formularies will provide Part D enrollees a comprehensive benefit â?? one that covers an amount and variety of drugs sufficient to treat all disease states.”
” America’s seniors deserve a Medicare prescription drug benefit that builds upon PBMs’ proven success in the commercial marketplace in striking the right balance between cost, access, and quality. PCMA and its member companies will continue to work with beneficiaries, policymakers, and others to ensure that marketplace tools and techniques can be used to bring all seniors the same broad access to prescription drugs enjoyed by vast majority of Americans.”

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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