Congressman, Pharmacist, and Lawyer Debate PBMs, Drug Prices at Annual COA Meeting

April 27, 2017

At the 2017 Community Oncology Conference, participants discussed the impact of pharmacy benefit managers (PBMs) on oncology drug prices and patient access to much needed treatments.

With drug price debates escalating daily, stakeholders in healthcare, particularly in cancer care, have been very vocal about who should take the blame and bring about changes to reduce the cost of care for patients. A white paper commissioned by the Community Oncology Alliance has aimed the spotlight on practices by pharmacy benefit managers (PBMs) that prevent a reduction in drug prices.

At the 2017 Community Oncology Conference, being held April 26-27 at the Gaylord National Hotel and Convention Center in National Harbor, Maryland, panelists discussed the evolution of PBMs, how their role has changed over the years, and the resulting impact on drug prices and patient access.

Participating in the discussion were the Honorable Earl L. “Buddy” Carter, US House of Representatives; Steven D’Amato, BS Pharm, executive director, New England Cancer Specialists; Jonathan E. Levitt, Esq, founding partner, Frier Levitt. Frier Levitt helped develop the COA white paper on PBMs. Joshua Cox, PharmD, BCPS, director of pharmacy, Dayton Physicians Network moderated the discussion.

Cox provided a historic perspective to how PBMs came to be. “In the early '60s, PBMs played a very important role in the drug distribution network—they brought in technology that impacted the drug supply chain,” he said. Over time, however, with consolidations, their patient network grew and PBMs played a greater role in negotiations. The Federal Trade Commission realized soon enough the conflict of interests resulting from the ensuing PBM-manufacturer alliance, and it was eventually broken up, Cox said.

Today, through mergers and acquisitions, PBMs are vertically integrated in the healthcare system and every major PBM owns a specialty or mail-order pharmacy, Cox said, asking the panelists to comment on how they see this impact the healthcare system.

“Escalating prices of prescription medications has shone the light on this issue with PBMs,” Carter said. It is the most talked about topic in Congress, where lawmakers are now looking at the escalating costs and the reasons behind it, he explained, adding that “transparency is the key here.” Three PBMs controlling 80% of the market is not competition in any sense, Carter said. “We need to break that.”

He then cited the example of how pharmaceutical manufacturer Mylan, manufacturer of the EpiPen—which is used to treat life-threating allergic reactions—was abusing the system with its EpiPen price increase.

“PBMs are not focused on patient care, and we have access issues that we constantly face in our clinic” D’Amato explained, adding that patient care is affected because the patients are often forced to go through a PBM to get their drug, instead of at the point of care like we provide. “On a weekly basis, my pharmacists come to me with this information,” D’Amato added, saying that PBMs are diverting prescriptions from our clinic for financial gains, which is unethical, he said.

Levitt explained that the PBMs practice of using protected health information for marketing purposes is illegal under HIPAA under many state laws. This “prescription trolling” should not be accepted by clinics, he said. Another question that he raised was “Where do the DIR [direct and indirect remuneration] fees gathered by PBMs go?” The power to take away 60% to 70% profitability of a prescription is the power to exclude a community practice from the Medicare network, Levitt explained. PBMs have also tried to limit network access and pushed network terminations, he added.

Cox asked the panelists that as clinics get a better understanding of DIR fees, “How can a pharmacy make a rational decision?"

“DIR fees associated with quality metrics are not working,” D’Amato explained, adding that larger clinics might be losing millions of dollars in DIR fees. “It’s not a sustainable business model,” agreed Carter.

Levitt explained that this can ultimately impact patient access, especially when a pharmacy might be one of a few providers of certain exclusive drugs. “So, 6% DIR fees on a drug might put a pharmacy underwater,” and it may decide

D’Amato also indicated that a PBM cannot compete with the patient care and patient safety issues that a community practice at the point of care manages. “A PBM does not have that kind of management skill or even the relation with the patient. In my mind, we are the ones that should be providing this service,” he added.

Addressing the PBM tactic of “gag orders” where a PBM can prevent a pharmacy from educating patients on where they can find the drug at a cheaper price, Carter said, “We are working to eliminate this gag order.”

The panelists agreed that while PBMs have a tremendous influence on healthcare, they need to bring in more transparency.

“We will continue to press on this in Congress. The executive branch is in tune with what’s going on here. We may see something evolve out of that,” Carter told the audience.