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Local Druggists Argue Over Price Disclosures

The nation’s community pharmacists are working to leverage the health care debate to force companies that manage drug benefits into lifting the veil from their typically secretive negotiations with pharmaceutical firms.

The National Community Pharmacists Association says that forcing pharmacy benefit managers to disclose more about their business practices could save patients and their health plans billions of dollars. But the Pharmaceutical Care Management Association, the PBM lobbying group, argues that just the opposite would happen: Patients would ultimately pay a higher price for their medications.

“To the extent that the PBMs, the middlemen, are either squeezed out, or their take, so to speak, is reduced, that lowers costs for patients,— said the community pharmacists’ top lobbyist, John Coster. “You start out with a dollar and the PBM is taking a certain percentage of that dollar. If they take less, then there’s more for the plan and more for the patients.—

Transparency, Coster added, would reveal “how much the PBMs launder the drug money.—

Mark Merritt, who leads the PCMA, says that’s simply ridiculous.

“Every single study and every third-party organization that’s looked at this — including the CBO — have always said it increases costs,— Merritt said. “Every state that’s looked at this has rejected it.—

Merritt said proposals for greater transparency would actually force PBMs to divulge the information that helps them wrestle cheaper prices out of pharmaceutical companies.

“It essentially makes us play poker with the drug companies with all our cards facing up,— Merritt said. “Transparency means different things, and to create a one-size-fits-all, federal mandate that will open up our books to the drug companies we’re negotiating against, is going to increase prices.—

Merritt said his member companies often play drug companies off one another in order to get discounts for patients. If two drug companies make a similar medication, then the PBMs will give preference — typically in the form of a cheaper co-payment — to the drug manufactured by the company that offers the biggest discounts.

The House Energy and Commerce Committee’s health care reform bill includes an amendment that would mandate more PBM disclosures for those companies that contract with health plans in a national insurance exchange or with a public insurance option. The Senate Finance Committee has a section on transparency, but it is unclear whether it would relate to PBMs.

Coster’s group met with the staff of Speaker Nancy Pelosi (D-Calif.) on the transparency issue during the August recess, and Coster said the Congressional Budget Office has indicated that such disclosures would actually save money.

Coster’s association has some of the leading consumer advocacy groups on board. The Consumer Federation of America and the U.S. Public Interest Research Group penned an Aug. 20 letter with the National Legislative Association on Prescription Drug Prices to Pelosi urging her to include PBM transparency in health care reform legislation.

“PBMs represent the most rapidly growing segment of health care spending, and yet they are the only part of the health care market that is still unregulated,— the letter stated. “Because of the lack of regulation PBMs engage in fraudulent and deceptive practices, resulting in several enforcement actions by a coalition of state attorneys general that have secured over $371 million in fines and penalties.—

Coster said the House transparency amendment, sponsored by Rep. Anthony Weiner (D-N.Y.), would be a good start to further PBM regulations.

“It’s a start,— Coster said. “It serves as the building blocks for other provisions.—

The fight over transparency in health care reform isn’t the first time community pharmacists have found themselves in a brawl with PBMs.

Coster said his pharmacy members have difficult negotiations with the PBMs when it comes to contracts.

“We have very little bargaining power with the PBMs,— he said. “Reimbursement rates are consistently coming down. It’s a David versus Goliath relationship.—

Even so, Coster said the community pharmacists are not out to crush PBMs’ businesses.

“There is a need for someone to administer the drug benefit,— he said. “But they have found ways to game the system in such a way that they are actually adding costs to the system.—

Merritt, however, says the transparency issue wouldn’t help community pharmacists and, in reality, would only help drug companies.

“This would just be more Pharma pork in health care reform,— Merritt said. “Those who inadvertently or otherwise use the complicated nature of health care reform to pursue their agenda, this would just increase costs for consumers and taxpayers and goes directly against the spirit and purpose of health care reform.—

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