OPINION:
The 117th Congress aggressively addressed the issue of high drug prices, but as the new 118th Congress begins its work next month, there is much more to be done — especially with regard to pharmacy benefit managers (PBMs), our supply chain’s middlemen.
PBMs were originally established to do what their name suggests: Manage prescription benefits so that payers, including insurers and employers, could be sure that medications were being prescribed and covered appropriately. PBMs were compensated based on the administrative work performed.
Along the way, however, PBMs’ compensation morphed into percentages of the prices of the drugs for which they control utilization, creating a perverse incentive that paradoxically has helped cause an increasing cost spiral for patients. Rebates, fees and other price concessions in their current form have been misdirected and opaque, resulting in rising list prices, with discounts that remain unavailable to patients. Worse still, the utilization management that PBMs leverage to drive patients to more profitable drugs has increased delays and barriers in accessing needed treatments.
For these reasons, we eagerly await the results of the Federal Trade Commission’s study on the PBM industry; these findings will hopefully illuminate the need for more legislative reform. There are, however, some misaligned incentives that Congress can and should address immediately, particularly since bipartisan support exists for many of these reforms.
The overarching perverse incentive is that the list price of a drug is tied to the PBM’s compensation. This leads to absurd scenarios, such as PBMs covering a brand-name drug with a list price of $10,000 while excluding its $450 generic version from their formularies or covering the generic only on the specialty tier. When a PBM’s compensation equates to a percentage of the list price, we should not be surprised that this occurs — but that does not make it any less disastrous for the patients whose cost-sharing is assessed against that same list price. With regard to federally regulated programs, Congress should sever the link between list prices and PBM income. A flat fee reimbursement structure would end this perverse incentive.
Meaningful relief for patients will require more than delinking alone. Patients should also be able to share in the benefit of all price concessions provided by drug companies to insurers and PBMs, through mandatory pass-through provisions. Moreover, patients — particularly those with high prescription drug costs — need more than just financial relief; they need help with the right to even access their medications in the first place.
To that end, Congress should build on the significant bipartisan momentum related to the reform of utilization management, both prior authorization and step therapy. These protocols too should be “delinked,” in that they should not be leveraged to drive patients to the drug most profitable for the PBM. Rather, these programs should be reconstructed to help the patient gain access to the drug prescribed by their physician or a therapeutic alternative that costs the patient less in terms of cost-sharing.
As practicing rheumatologists, our proposed reforms focus on the serious problems related to formularies, but that is not the entire picture. Our colleagues in the independent pharmacy world have reform ideas related to pharmacy dispensing and networks that must be pursued simultaneously. Reforming PBM abuses could not only reduce costs for patients and help them gain access to the medication prescribed by their physician but also help them obtain these medications at the pharmacy of their choice by allowing independent and local pharmacies into PBM networks and prohibiting predatory reimbursement practices.
Comprehensive reform will consist of a variety of policy approaches and may require iterative solutions to stay ahead of PBM industry abuses. These issues did not arise overnight, nor will they be solved that way. But patients have waited long enough. We hope that legislators will begin this work early in the 118th Congress.
• Drs. Robert Levin, Michael Schweitz and Angus Worthing are rheumatologists active in the leadership of the Alliance for Transparent and Affordable Prescriptions (ATAP), a coalition of patient and provider groups dedicated to PBM industry reform.
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