Insurance plan sponsors — employers, self-insured plans and others — work every day to cover the health care needs of hundreds of millions of Americans, including their prescription drug needs. Health plans rely on pharmacy benefit managers to help deliver on those needs in a way that provides affordable access for the unique enrollee and patient populations that they represent — work that is all the more crucial in this era of high drug prices.
This ecosystem that manages prescription drug benefits has worked well for the majority of prescription drugs, delivering overall a low-cost trend by encouraging competition among drug manufacturers and drugstores. But we recognize that there is more work to be done. Too many enrollees and patients face escalating costs due to increasingly high drug prices that are most acute in therapeutic areas where drug companies are blocking competition.
Unfortunately, legislation in Congress would limit plan sponsors’ choices and could ultimately upend prescription drug benefits in the private marketplace. The bill, the Lower Health Care Costs Act (S. 1895) includes a provision (section 306) that calls for unprecedented government interference into plan sponsors’ ability to choose the health care services that best fit the needs of their enrollees.
We know full well that, for those offering health care coverage, cost is a primary concern. There are options for plan sponsors that take away cost uncertainties, such as when different pharmacies charge different prices for a given drug.
The unpredictable nature of pricing variability can increase the amount plan sponsors spend on pharmacy benefits. So, there are contracting options that deflect risk away from the plan sponsor to the pharmacy benefit manager, and therefore also reduce the risk of cost increases for consumers.
This can be particularly important for smaller employers who have less ability to manage cost uncertainties. We shouldn’t take away their choices.
Our health care system isn’t set up to be one-size-fits-all. Rather, individual businesses, which are best positioned to understand the needs of their enrollees, should have the flexibility to design prescription drug benefits that optimize health care outcomes for everyone they represent.
Certainly, plan sponsors should be fully armed with the information they need to make informed choices when setting up contracts to manage their prescription drug benefits. Transparency is a necessity, and we support transparency that empowers not only plan sponsors, but patients, prescribers and policymakers, while preserving privacy for individuals.
If members of Congress are seeking greater transparency, we stand ready to work with them. We need greater transparency throughout the drug supply chain.
We understand that high drug prices are a real issue in the everyday lives of millions of Americans, and we all have a role to play in finding solutions. Members of Congress have identified the right problem and should be commended for taking it on. Section 306 simply represents the wrong “solution.”
From our standpoint, the most effective way to lower prescription drug costs is through increased competition in the marketplace. PBMs are the only entities in the prescription drug supply chain whose primary goal is to lower costs for patients and payers. When real competition exists in the marketplace, drug manufacturers are forced to negotiate, and the result is lower drug costs.
Policymakers should seek to increase competition to lower the costs of prescription drugs, rather than stripping away plan sponsor and employer choice from their health care contracting decisions and handing that authority to the government. We can do better and look forward to working with Congress to develop solutions that preserve choices for plan sponsors and the individuals they represent.
JC Scott is president and CEO of the Pharmaceutical Care Management Association.
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