US Pharm. 2006;1:1.
Some pharmacy pundits are saying it might be the beginning of the end of the
stranglehold pharmacy benefit managers (PBMs) have had on the pharmaceutical
community for the past two-plus decades. All this speculation comes in the
wake of an important decision by the U.S. Court of Appeals for the First
Circuit in Boston, upholding as constitutional a 2003 Maine law that required
more transparency from PBMs. What the law specifically states is that PBMs
will have to disclose to their clients (not publicly) any payments they
receive from pharmaceutical companies and pass along any discounts as a result
of those payments.
This case was originally brought against the Pharmaceutical Care Management
Association (PCMA), whose members include some of the largest PBMs. PCMA
argued that the law was unconstitutional because such transparency would
violate trade secret protections. And while the spinmeisters from all the
associations representing pharmacy and PBMs are hard at work framing their
respective positions, there is no question that this decision takes a big
chunk out of what seemed to be PBMs' once impenetrable armor. In an effort to
save consumers millions of dollars, as of this writing only Maine and the
District of Columbia have so far enacted such legislation. There is still the
question of whether this case will open a floodgate of similar laws from other
states.
Regardless of how you spin the results of this decision, it can be viewed only
as a loss for PBMs and a win for pharmacy. At their inception, PBMs played a
major role in helping corporations manage the prescription benefit
programs offered to employees. The idea was for PBMs to get the best deal on
prescriptions for their corporate clients and pay the pharmacist an honest
wage for dispensing them. It is an understatement to say that pharmacists were
never enthusiastic about giving up cash-paying customers, but with rising
health care costs, the handwriting was on the wall. Besides, originally the
PBMs seemed to be in their corner in making the transition from cash to
third-party payments. Over the years, competition and greed took over, and
PBMs negotiated better deals in an effort to increase their customer base, at
the expense of pharmacists and consumers they supposedly represent. And while
it is easy to blame just the PBMs for this downward spiral in profits and
health care, corporations looking to cut their health care expenditures seemed
to turn a blind eye to how PBMs were achieving their cuts in prescription
costs. Multi-tiered copays and restrictive formularies were put into place
while reimbursements to pharmacists hit all-time lows, forcing many pharmacies
out of business; all the while PBMs increased their profits by negotiating
lucrative contracts that squeezed pharmaceutical companies on pricing. And I'm
not certain that pharmaceutical companies were crazy about the idea of
negotiating their way onto PBM formularies, but in truth, what other options
did they have? While the profession of pharmacy has remained strong,
the business of pharmacy has unfortunately not. Things have spun out of
control. It is a classic example of the tail wagging the dog, as PBMs no
longer manage programs--they control them.
Unfortunately, today's out-of-control health care economy has dictated the
need for cost consciousness, so I'm not saying there isn't a place or need for
PBMs who can responsibly manage prescription benefit programs. My hope is that
this court decision is a wake-up call for PBMs and that they will return to
the days of managing these programs and paying a pharmacist the fees they
deserve commensurate with their knowledge. With the launch of Medicare Part D
this month, it would be disturbing to see the unconscionable PBM business
practices that have transpired over the years repeated by Medicare's
Prescription Drug Programs.
Harold E. Cohen, R. Ph.
Editor-in-Chief
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