Another New Study Details Pharmacy Benefit Manager (PBM) Pocketing Rebates as Profits — Not Passing on to Patients Through Lower Premiums

DATE: October 16, 2017

PhRMA Milliman Analysis Debunks PBM Claims That Rebates Help Reduce Out-of-Pocket Costs for Prescription Medications

Washington, DC — With a Health, Education, Labor and Pensions (HELP) Committee hearing scheduled tomorrow surrounding the prescription drug distribution chain and its impact on patient costs, the Senior Care Pharmacy Coalition (SCPC) said yet another new study undermines Pharmacy Benefit Managers’ (PBMs) empty claims that “rebates” they negotiate with drug makers are actually passed along to consumers.

“The level of dishonesty and misdirection PBMs employ throughout the entire drug supply chain is breathtaking, and almost every week brings a new study or revelation spotlighting how these middlemen benefit at the expense of consumers and taxpayers,” said Alan G. Rosenbloom, President and CEO of SCPC, the only federal advocacy organization devoted exclusively to the interests of the nation’s LTC pharmacies and the patients they serve.

A new study released October 11 by the Milliman Group and sponsored by PhRMA calculated the actual costs to patients in increased premiums as compared to the savings to patients at the counter if PBMs actually passed-through rebates at the point of sale. Milliman estimated that patients might incur up to $4 per month in increased premiums, but would save ten to fifty times more ($41-$265, depending on deductible status and type of medication) in copays and deductible payments at the pharmacy counter if PBMs actually passed on the savings to patients.

The Milliman analysis comes on the heels of another new study by the Wakely Consulting Group, sponsored by the National Community Pharmacists Association (NCPA), finding the elimination of certain “clawbacks” Medicare Part D Prescription Drug Plans (PDPs) and PBMs impose after sale to unjustifiably reduce payments to pharmacies would save the federal government $3.4 billion over ten years. These clawbacks are technically known as “Direct and Indirect Remuneration” (DIR) fees.

Rosenbloom says the Milliman and Wakely studies examine just two of the ways in which PBMs use obfuscation and exercise oligopolistic market power to cost patients, pharmacies and Medicare money — with no increase in quality of care but generating substantial increases in profits for PBMs and insurance companies. PBMs use an increasingly creative array of opaque payment formulas, fees, charges, “incentives” and other adjustments – most imposed after enrollees receive and pay for their prescription medications, and after LTC pharmacies provide a full array of medications, care, and clinically-oriented consulting services.

“So-called ‘rebates’ and DIR fees are but two pieces of the puzzle when it comes to understanding the insidious influence of PBMs as a primary causal factor in higher costs for prescription medications, and we look forward to releasing a detailed statement for the record at tomorrow’s HELP hearing recommending solutions,” concluded Rosenbloom.

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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 across the country occupying approximately 675,000 beds. Visit us at www.seniorcarepharmacies.org to learn more.