Abusive, Opaque PBM Pricing Schemes Receive More Attention Over Summer Congressional Recess

DATE: August 29, 2017

As New State Laws Target Anti-Consumer PBM “Clawbacks,” ABC News Reports on Related Lawsuits

Washington, DC – With federal lawmakers introducing a variety of bipartisan, bicameral legislation throughout 2017 aimed at eliminating opaque Pharmacy Benefit Manager (PBM) pricing practices, the increasingly controversial middlemen in the national drug pricing chain now find themselves the target of new state laws passed to end so-called “clawbacks,” which retroactively extract dollars from consumers months after a transaction.

A new state law signed by Governor Dan Malloy (D-CT) would close a drug price loophole taking aim at PBM clawbacks — referred to technically as “Direct and Indirect Remuneration” (DIR) fees. The law protects consumers by eliminating retroactive fees PBMs impose on patients, a variety of pharmacy groups — including long term care (LTC) pharmacies — and the Medicare program itself.

Connecticut joins Louisiana, Georgia, North Dakota and Maine, which have also passed legislation aimed at stopping clawbacks amid growing concern about high prescription costs and the escalating national debate over drug prices. Several other states have also introduced bills related to clawbacks, which have prompted at least 16 lawsuits since October, 2016.

Meanwhile, ABC News aired a new report on the landslide of PBM lawsuits, detailing how the middlemen benefit from secretive, undisclosed pricing agreements.

“Clawbacks levied retroactively on LTC pharmacies serving vulnerable seniors are both abusive and contribute to pharmaceutical pricing volatility,” said Alan G. Rosenbloom, President of the Senior Care Pharmacy Coalition (SCPC), the only federal advocacy organization devoted exclusively to the interests on the nation’s LTC pharmacies and the patients they serve. “We thank Congressman Doug Collins (R-GA) for championing the cause of eliminating PBM clawbacks and articulately detailing the need to eliminate a variety of anti-free market PBM abuses.”

Rosenbloom noted that advancing the bicameral Improving Transparency and Accuracy in Medicare Part D Drug Spending Act (S. 413) will be an SCPC priority when Congress reconvenes in September. Introduced by Senators Shelley Moore Capito (R-WV) and Jon Tester (D-MT) in the Senate and House companion bill, H.R. 1038, introduced by Representatives Morgan Griffith (R-VA) and Peter Welch (D-VT), will stop PBMs from extracting retroactive DIR fees in transactions with patients, LTC pharmacies and the Medicare program.

The SCPC leader also pointed to a January 2017 Centers for Medicare & Medicaid Services (CMS) report, which finds that drug companies and pharmacies are paying larger rebates to PBMs and insurers, but that these PBMs are keeping the money rather than translating it into lower costs for government health care programs or beneficiaries.

CMS data show that since 2010, the growth in rebates or concessions paid by drug companies or pharmacies to PBMs or managed care plans (in addition to the lump sum payment plans received from Medicare) after the point of sale (called Direct and Indirect Remuneration or DIR) has far outpaced the growth in Part D drug costs. CMS reports DIR fees increased from $31 billion in 2012 to $50 billion in 2015.

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The SCPC is the national association for independent LTC pharmacies. Our member pharmacies provide care and services to patients in LTC facilities in across the country occupying approximately 675,000 beds across the country.  Visit us at www.seniorcarepharmacies.org to learn more.