Trouble on the horizon for pharmacy benefit managers?
Pharmacy benefit managers (PBMs) may be forced to disclose additional information about their pricing if certain Democratic lawmakers have their way, according to this recent WSJ story (sub req’d).
One version of the health legislation passed by the House Energy and Commerce Committee last month includes provisions that could overhaul how pharmacy-benefit managers — middlemen hired by insurers to administer prescription-drug benefits — operate. It would require them to inform the government or federally approved health plans about differences between the average cost of drugs to the PBM and what the PBM charges insurers. It would also require PBMs to disclose rebates they receive from drug makers for pushing certain pills and say whether those rebates are passed on to insurers.
Rep. Anthony Weiner (D. , N.Y.) is a leading House proponent of the measure. Senator Maria Cantwell (D., Wash) is advocating similar measures on the Senate side.
The goal of the provisions is to drive into the open any cases in which PBMs are earning improper profit margins or rebates, said Rep. Anthony Weiner (D., N.Y.), the lead sponsor of the provisions. He said his legislation will “cut down on inside deals that benefit only the PBMs and the drug companies.”
An analysis by the Peter Orszag-era CBO expressed skepticism that similar measures would have the intended effect:
The disclosure of drug rebates could affect Medicare spending through two principal mechanisms. First, disclosure would probably make rebates less varied among purchasers, with large rebates and small rebates tending to converge toward some average rebate. Such compression, for reasons discussed below, would tend to reduce the rebates that PDPs received and thus would raise Medicare costs. Second, for a range of medical conditions, drugs appropriate for treatment are available from only a few manufacturers; disclosure of drug-by-drug rebate data in those cases would facilitate tacit collusion among those manufacturers, which would tend to raise drug prices.
It will be interesting to see how this plays out over the course of the health care reform debate.