As Shkreli Puts Face on Drug Pricing Abuses, PBM Reimbursement Trends Analysis Prompts Long-Term Care Pharmacy Group to Call for Increased 2016 Congressional Investigation

As More Capitol Hill Scrutiny Directed at Lack of PBM Pricing Transparency, SCPC Charges PBMs an “Anti-Competitive Oligarchy Posing as Benevolent Actors in Pharma Marketplace”

 Washington, DC — With former Turing Pharmaceuticals CEO Martin Shkreli significantly raising the public profile of prescription drug pricing abuses, the Senior Care Pharmacy Coalition (SCPC) is stepping up its criticism of anti-competitive pharmacy benefit manager (PBM) pricing practices by pointing to Avalere Health pharmacy data, which SCPC argues demonstrates PBMs’ pricing methodology leads to arbitrary and capricious reimbursement – warranting greater Congressional scrutiny and oversight in 2016.

“While Martin Shkreli has helped put a face on prescription drug pricing abuses, the Avalere Health data helps shed much-needed light on anti-competitive PBM pricing practices, and their false claim that the pricing methodology used to reimburse LTC pharmacies and others for prescribed generic drugs is market-based,” stated SCPC President and CEO Alan G. Rosenbloom. “To the contrary, we believe the data demonstrates PBMs’ pricing methodology leads to arbitrary and capricious reimbursement.”

Under Medicare Part D – the largest payer for prescription medications in LTC facilities – the PBMs that administer Prescription Drug Plans (PDPs), and which often are owned by the PDPs or a shared parent company, use a Maximum Allowable Cost (MAC) pricing formula to establish reimbursement rates for a majority of generic drugs independent LTC pharmacies dispense to elderly Medicare beneficiaries.

SCPC argues that the data between PBMs and Independent LTC pharmacies find increasing reimbursement inequities for LTC pharmacies driven by these MAC pricing methodologies. Significantly, the data show MAC prices paid for the same generic drugs on the same day by different payers can vary considerably, which SCPC contends raises questions about the relationship between price variation and actual market conditions. The data analysis, funded by SCPC, is one in a series of Avalere Health analyses assessing various facets of the marketplace in which the nation’s LTC pharmacies operate.

Noting the increased congressional focus on problematic PBM pricing activities in November 2015 by the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law, and the February 2016 hearing before the House Committee on Oversight and Government Reform, Rosenbloom said, “We commend the rising level of bipartisan congressional scrutiny of the PBM industry, which has become an anti-competitive oligarchy merely posing as a benevolent actor in the pharmaceutical marketplace.”

In November, U.S. Rep. Doug Collins (R-GA) aggressively questioning the veracity of PBM industry witnesses who insisted LTC pharmacy reimbursement practices adhered to market forces. In fact, PBM officials from Express Scripts and CVS Health admitted they keep multiple sets of MAC lists for the same drugs, prompting Collins to suggest a “disconnect” between what PBMs claim about pricing transparency and the marketplace reality. Rep. Collins also questioned PBMs’ contention their marketplace is highly competitive, noting just three companies – Express Scripts, CVS Health and OptumRx – control approximately 80 percent of the PBM market. “Not a great deal of competitiveness there,” Collins observed.

Two weeks ago at a House Committee on Oversight and Government Reform hearing entitled, “Developments in the Prescription Drug Market,” U.S. Rep. Buddy Carter (R-GA) observed: “I’m really concerned about the current marketplace because it creates perverse incentives for PBMs to shut out independent pharmacies at the expense of the American public… We have to have transparency in the PBM world.”

Rosenbloom also lauded Rep. Collins’ 12/8 House floor speech further excoriating PBMs’ anti-consumer record:

“If they were truly acting in the best interests of consumers they would not oppose virtually every single transparency reform effort on the state and federal level… They come to Congress and say one thing to members and then turn around and behave any way they wish in the pharmacy marketplace without fear of enforcement or oversight… They come with shiny objects in savings that many times never materialize but at the same time funneling money to their own businesses… PBMs are not representing the best interests of consumers, they’re acting in the best interest of themselves.”

In October 2015, SCPC released its first, broad-based Avalere Health study, “Long-Term Care Pharmacy: The Evolving Marketplace and Emerging Policy Issues,” representing the most detailed analysis of the nation’s growing LTC pharmacy sector since Medicare Part D was implemented in 2006.