PBM scrutiny grows under pushback against rising costs
- New York State Governor Andrew Cuomo has proposed a slew of regulations and restrictions to tighten up finances and increase transparency, some targeting pharmacy benefit managers (PBMs).
- Yet, industry trade group, the Pharmaceutical Care Management Association (PCMA) is getting ready for battle, stating that PBMs actually save money on healthcare and insisting that the legislation could increase costs.
- In related events, Douglas Pick, founder, president and CEO of pharmacy benefits manager Pharmaceutical Technologies, faces up to three years in federal prison after pleading guilty to making unlawful kickback payments.
There has been a lot of talk about price gouging and price hikes of late, with plenty of blame to go around. Martin Shkreli is blaming pretty much everyone. The National Centre for Policy Analysis is blaming the FDA. BIO is blaming insurers. Health benefit funds and President Donald Trump are blaming pharma companies.
And in turn, the pharma industry and New York State are blaming pharmacy benefit managers (PBMs). In the latest stage of the battle, Andrew Cuomo, Governor of New York State, and has proposed a three-pronged approach that he believes will tackle the issue of rising drug prices. The first and second prongs put caps on pricing for Medicaid drugs and then issue surcharges or rebates on any drugs that exceed these caps. The third prong specifically targets PBMs, requiring them to register with the State, be licensed, and work within regulations requiring disclosure of incentives, benefits and other financial arrangements.
While Cuomo's mandate might please officials, the PBMs aren't looking so happy. The Pharmaceutical Care Management Association (PCMA) has said: "This mandate would increase costs by tying the hands of employers, unions, and public programs that hire PBMs to negotiate discounts on prescription drugs. It may also be illegal, given today’s decision in the U.S. Federal Appeals Court in the 8th Circuit."
The uncertainties over pricing under the still new presidency is also unsettling the PCMA, according to Buzzfeed, which has gotten hold of an internal memo sent to PCMA's board of directors by its CEO Mark Merritt, that said "The sense that this President could make any decision, at any time, for any reason, on any issue is rattling industries in the health care sector and beyond."
Merritt added in the memo that the trade body was planning to push forward to guard against drug pricing provisions in legislation "given the political uncertainty, headline risk, and other unique challenges that come with a President more inclined toward quick, instinctive action than the traditional, deliberative decision-making process."
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