SCPC Praises Rep. Doug Collins’ Mission to Spotlight PBMs — “Drug Industry’s Middlemen”

DATE: February 8, 2017

Pharmacy Benefit Managers Emerge as Major 2017 Target Amid Drug Pricing Uproar

Washington, DC — Commenting on new reporting in Axios noting that U.S. Rep. Doug Collins (R-GA) and others in Congress “are ready and willing” to shine a light on non-transparent Pharmacy Benefit Manager (PBM) pricing practices, the Senior Care Pharmacy Coalition (SCPC) today praised Collins’ intent to reintroduce and add items to his 2015 bill (H.R. 244 — Mac Transparency Act), which would require “greater transparency of the rebates, fees and costs” tied to PBMs.

“I truly believe the PBM industry is one of the most detrimental pieces of health care,” says Collins to Axios, who also observes, “A lot of people assumed the big drug companies were just jacking up prices and manipulating the system. But you have to look at this other issue of the PBMs. It was sort of a hidden issue because they want to stay hidden.”

Alan G. Rosenbloom, President and CEO of SCPC, stated, “As we did last year, SCPC looks forward to working closely with Rep. Collins and members from both sides of the aisle in 2017 to shine much-needed light on these unaccountable drug industry middlemen for the benefit of consumers, taxpayers and our entire health care system.” H.R. 244 was co-sponsored by Rep. Dave Loebsack (D-IA).    

In the context of the nation’s Long Term Care (LTC) Pharmacy sector, Rosenbloom pointed out that opaque PBM pricing practices make it impossible for LTC pharmacies to predict how they will be reimbursed for the generic drugs they dispense under Medicare Part D, and passage of Collins’ legislation “would be a strong first step towards more equitable, fair and transparent reimbursement for pharmacies dispensing generic drugs to seniors.”

Under Medicare Part D, the PBMs that administer Prescription Drug Plans (PDPs) — and which often are owned by the PDPs or a shared parent company and frequently have links to major chain drug stores — 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. Nearly 90% of all medications dispensed by LTC pharmacies to seniors are generics.

Rosenbloom praised Collins and Loebsack for their ongoing efforts to focus upon how PBMs surreptitiously develop and alter their MAC pricing lists, how those prices are established, how frequently those prices are updated, and the reasons behind the updates.

“PBM MAC pricing abuses make it difficult if not impossible for LTC pharmacies to forecast revenues, and to assure resources sufficient to provide the extensive array of services LTC patients require, and which federal law mandates LTC pharmacies to provide,” the SCPC leader concluded.

Rosenbloom said the SCPC will continue to focus attention on anti-competitive PBM pricing practices by pointing to Avalere Health pharmacy data, which SCPC argues demonstrates PBMs’ pricing methodology leads to arbitrary and capricious reimbursement.

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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.