Latest news and updates about the Medicare and pharmacy industries.

Transparency Was A Key Theme at the PBM Senate Hearing

Posted on in Industry Updates by admin

Last week, executives from the five largest PBMs  — CVS Health, Cigna, Prime Therapeutics, Humana, and UnitedHealthcare’s OptumRx — appeared at a Senate Finance Committee hearing to discuss their roles in pharmaceutical supply chain. The high price of prescription drugs has become a rare bipartisan issue. The hearing, led by Chairman Chuck Grassley (R-Iowa), and Ranking Member Ron Wyden (D-Oregon), was the Committee’s third on drug prices this year.

Why is this important?

PBMs are often criticized for their rebate system in which manufacturers offer discounts to gain access to plan formularies. On one hand, critics argue that PBMs keep portions of the rebates they receive, instead of passing them along to payers. Manufacturers, too, have said that they are pressured to increase list prices because PBMs demand larger rebates. On the other hand, PBMs say that a change to the rebate system would raise premiums and weaken their negotiating power with drug manufacturers.

The hearing also touched on the topic of pharmacy DIR and performance measures. According to CMS, pharmacy price concessions and fees grew dramatically between 2013 and 2017, from $229 million to $4 billion. Humana President Dr. William Fleming, the only pharmacist of the group, defended the practice as a mechanism for improving patient care and adherence. He cited a 2% year-over-year increase in adherence by involving pharmacists in a value-based conversation, similar to doctors and hospitals. No other metrics beyond adherence were mentioned and the PBMs conceded that pharmacy performance metrics are not confidential. 

What happens now?

As it stands, the Department of Health and Human Services (HHS) is currently evaluating whether to remove rebates from federal programs. Additionally, HHS Secretary Alex Azar has vowed to fix pharmacy DIRs (he hinted earlier in the month at an announcement coming very soon). 

At the hearing, executives from CVS, Humana, and Prime Therapeutics agreed to not oppose a hypothetical ban on spread pricing, which sees some companies mark up the difference between the amount they charge the payer and how much a pharmacy is reimbursed for a drug. 

It remains to be seen what comes of these hearings. Many news stories have focused on PBMs passing the responsibility for high drug prices on to drug manufacturers, continuing the cycle of blame. But one key theme emerged: there is a serious need for transparency in the supply chain. And, as Senator Wyden noted, there needs to be a sense of urgency when it comes to finding a resolution. 

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