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Panicking PBMs

2017-02-15 | Peter Pitts
No wonder PBMs are scared. When their profits and practices are made transparent they should be afraid – very afraid. BioCentury reveals the extent of their panic.

PBMs launch attack on drug companies

PBMs have launched an aggressive campaign to persuade the Trump administration to attack drug company profits while leaving the PBM business model untouched. The strategy was outlined in a leaked email and documents sent by Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt to the organization's board on Feb. 6.

PBMs want to discourage the Trump administration from replacing private sector drug price negotiations with government negotiations. Much of the industry’s strategy is aimed at countering messages from PhRMA and its members that drug price complaints are the result of a bloated supply chain and insurance plan designs that place too much financial burden on consumers. 
PCMA, a trade association for PBMs, has sent the Trump administration a list of proposals for lowering drug prices.

With a few exceptions, it reads like a drug industry nightmare. The list includes reducing biologic exclusivity to seven years, eliminating pay-for-delay deals and ending tax deductions for expenses related to direct-to-consumer advertising.
PCMA also wants CMS to eliminate protected classes from Medicare Part D, create a competitive acquisition program for Part B drugs, and sharply limit the use of manufacturer coupons. PCMA estimates that over a ten-year period, ending tax deductions for direct-to-consumer ads would save $37 billion, while reducing the biologics exclusivity period and implementing the Part B acquisition program would each yield $4 billion in savings.

Merritt wrote that PCMA was rolling out the new strategy before key Trump administration health officials were in place because quick action was needed, "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."

He outlined efforts to build relationships with top White House staff to counter drug companies' influence, and said PCMA may try to reach the president through television. "Given the President’s interest in a select number of news programs, PCMA will also explore other forms of advertising that target those particular venues."

The trade association also plans to use a "grassroots" coalition it created with “more than 73,000 recruited allies who can be leveraged as needed to help drive our message in key districts around the country,” Merritt wrote.
PCMA declined to comment on the leak.

PhRMA and PCMA are also operating from the same advertising playbook. In massive campaigns targeting policymakers and key opinion leaders, both have promoted their messages online, in print and through video. As of Feb. 6, PCMA said it was attracting 1,100 viewers a day to its website, and digital ads launched on Jan. 16 had received 14 million views, including three million who watched video ads. 
PCMA and drug companies share some common ground. The PBM industry is pushing to exempt insurance plans in Affordable Care Act exchanges from the Medicaid best price requirement in order to allow value-based pricing. Like PhRMA and BIO, PCMA also has proposed an FDA safe harbor for drug companies and payers to discuss drugs prior to approval.