Indies, PBMs renew clash over transparency

ALEXANDRIA, Va., and WASHINGTON — The war of words between independent pharmacies and the pharmacy benefit management industry again is heating up. And again, the two groups are at odds over the question of how transparent — or opaque — the PBM industry’s business dealings with its clients are, and whether those business practices demand reform.

The newest spat over the issue came Tuesday after the National Community Pharmacists Association testified during a federal public hearing on labor practices affecting welfare benefit plans. At that hearing, NCPA's VP PBM transparency Zachary French urged the U.S. Department of Labor to impose new disclosure standards on PBMs as the government mulls new rules for employee benefit providers for pension and health plans.

French told Labor Department officials that independent pharmacies struggle against an “extremely concentrated PBM marketplace” with “minimal ... state and federal regulation” and an opaque business model that fosters “fraudulent and deceptive conduct.”

What’s more, he asserted, “one of the PBM’s primary profit streams is derived from rebates provided by drug manufacturers for driving [branded] drug market share on drugs purchased on behalf of PBM clients. PBMs retain all or a very large percentage of these rebates, even though they are generated by the welfare benefit plans’ pharmacy ‘spend.’”

French argued that the practice is “a clear conflict of interest on the part of the PBM serving in its role as a service provider to a welfare benefit plan.”

The NCPA executive told the agency that the recently enacted healthcare-reform legislation “now mandates a certain degree of PBM transparency in the form of aggregated required disclosures of all of the PBMs that will serve any of the state insurance exchange health plans, as well as in Medicare Part D.”

In equally harsh language, the Pharmaceutical Care Management Association was quick to respond. “The independent drug store lobby continues its ‘disclosure double standard’ campaign of opposing pricing transparency for themselves in Medicaid while demanding more transparency for pharmacy benefit managers,” the group said. “This campaign puts its congressional and retail pharmacy allies in the embarrassing role of attacking and defending the same policy, depending on whether it applies to them or other members of the pharmacy supply chain.”

The PCMA was referring to a new effort by the NCPA to exempt independent pharmacies from antitrust laws so they can fully collaborate in accountable care organizations and other new healthcare provider teams envisioned by the health-reform law.

“While the federal ‘transparency’ provision in the healthcare law already applies to PBMs — but not independent retailers — an interesting irony remains: independent drug stores are themselves the least ‘transparent’ part of today’s pharmacy supply chain,” PCMA asserted. “PBMs support policies that empower payers to make informed healthcare purchasing decisions. However, so-called ‘transparency’ proposals that would give drug stores and drug makers access to competitive information would undermine these efforts and only increase prices.”

What’s more, the group argued, “the [Federal Trade Commission] has explored this issue and concluded that the PBM market is extremely competitive and that this kind of ‘transparency’ would increase, not decrease, costs for consumers.”

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