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PBM Lobby Memo Tells Trump: Give Us More Power To Pocket Rebates

2017-02-09 | Robert Goldberg
The Pharmaceutical Care Management Association, the lobbying group for pharmacy benefit management companies, produced a memo outlining a strategy to fight back against efforts to disgorge them of the rebates that are the only reason for PBMs existing.

Here's the essence of the PCMA memo:  

Dear President Trump and Congress,

We save you money so give us even greater control who gets what drugs and at what price. 
 
Forget the fact that we will make you money in the following manner:
We will increase the use of switching meds on people without telling them, forcing them to stop using drugs that have worked for them for years. 
We will increase step therapy protocols that maximize profit and limit choice.  We will increase the number of patients begging for medicines that work.
And we will increase the cut of retail pharmacy profits we take.
If patients get sicker and cost more as a result, who cares.  That's not our problem. Or yours

We will provide you a cut of whatever we make.  Promise. 

Peace and love

The PBMs

No one can accuse the PBMs of not being transparent.  The memo is classic rent seeking.  

It still begs the question of the use of discriminatory benefit designs to extract $60-70 billion in rebates and patient cost sharing from the sickest patients.  

Express Scripts says that "the unit cost of specialty drugs, the most expensive category of medicines, rose by 6.2 percent after drugmaker discounts. That's the smallest increase in five years."  But list prices increased by about 11 percent from 2015-2016, the same increase in list prices for specialty Rx between 2014-105.   So if the 6.2 percent is net of rebates, that means Express Scripts just pocketed more rebate dollars.  Meanwhile, cost sharing for most specialty drugs increased.   

It still begs the question of why not let price competition flourish under other business models.   The fact is, instead of PBMs pocketing rebates and clawing back revenues of retail and specialty pharmacies after the fact, why not let the price competition occur at the point of service with the goal of eliminating cost sharing.  Prices throughout the supply chain would still be proprietary but would be transparent and predictable at the consumer level.    
 
The memo all calls for joining forces with AHIP.  THat's a natural ally because the biggest insurers get the most significant cut of the rebates PBMs collected.   
 
They -- along with the drug companies -- should be paid for how well they do, not because they exist.  

Finally, as I noted in my last blog: It's NOT their money.  It's ultimately pharma's $.   Getting rid of PBMs won't help consumers if pharma doesn't use the rebate money to reduce prices and cost sharing!