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PBMs Take the Heat


Arnela Jusupovic - July 28, 2020 - 0 comments

PBMS take the heat

Over the weekend, a push towards lowering drug costs was re-initiated by the Trump Administration. Four Executive Orders were signed by President Trump in regards to the affordability and accessibility of prescription drugs in the United States. While these Orders could potentially offer much-needed relief, health policy experts say it may take months to implement, if at all. “The executive orders have for the most part been proposed by the Trump administration in various forms in the past, but stalled amid industry pushback,” according to Reuters

The National Community Pharmacists Association (NCPA) is “cautiously optimistic” – these broad directives will now be taken into the hands of agencies and turned into regulations. The Order pertaining to the regulation of PBMs does not specifically mention pharmacy DIR fees, but this is a step in the right direction with potential to be added in the rule-making process. 

An Overview of the 4 Executive Orders:

1. Regulation of PBMs

The Highlights:

  • PBMs must pass rebates on to patients instead of pocketing profits
  • Applies to Medicare Part D, which primarily affects senior patients
  • May be difficult to implement without increasing Medicare premiums

 

 Pharmacy benefit managers (PBMs) are typically known for their more shady dealings as the middleman between drug manufacturers and insurers. PBMs secure discounts, or rebates, for prescription drugs – which they often keep as profit. This Order would require PBMs to pass these savings on to the patients themselves, saving billions of dollars a year. 

 

Before this can take effect, the Secretary of Health and Humans Services (HHS) must first confirm that the Order would not increase federal spending, patient premiums, or out-of-pocket costs. This caveat may cause issues with the policy’s implementation.

2. Drug Importation 

 The Highlights:

  • Allow for individual importation of drugs from other countries
  • State plans for safe importation of certain drugs
  • Re-importation of insulin products made in the US

 

Due to the exorbitant cost of some prescription drugs, individuals sometimes resort to obtaining drugs from other countries. This Order would legally permit patients to import their own lower cost drugs, as well as continuing an effort for states to facilitate the safe importation of certain drugs. In addition, the HHS would be authorized to re-import insulin products back to the US if deemed necessary for emergency care. 

 

The caveat on this Order comes from skepticism on the limited drug supply that is available to the US from foreign markets and high cost of regulating these imports. It is unknown whether importation will greatly reduce drug prices. 

3. Access to Insulin

The Highlights:

  • Improve access to insulin for patients with no insurance or inadequate coverage
  • Discounts from drug companies must be passed on to the patient

 

The average price of insulin has roughly tripled in the past decade, causing a life-and-death struggle for many Americans who cannot afford the medication. This Order would require federally qualified health centers (FQHC) who purchase insulin products in the 340B program to pass any discounts and savings down to patients who need it most. 

 

FQHCs are federally subsidized clinics that serve low-income and rural populations, and through the 340B program they are able to purchase drugs at lower prices. By regulating their inflation of drug costs for patients, this would increase accessibility of life-saving insulin for millions of people each year. 

4. “Most Favored Nation” Pricing

 The Highlights:

  • The US price for Medicare Part B drugs would match the country with the current lowest price, or the “most favored nation”
  • Drugmakers have until late August to propose alternatives before this goes into effect 

 

This last Order is the most radical. It will not go into effect until late August, giving time for the drug industry to negotiate and present alternative plans of action. “If these talks are successful, we may not need to implement the fourth executive order, which is a very tough order,” remarks the President.

 

The concept of the “most favored nation” refers to the United States not paying any more for a prescription drug than the lowest price in other countries, after adjusting for differences in GDP. This is an amplified version of the International Pricing Index (IPI), which proposes paying the average price in a group of industrialized countries. The MFN rule would likely face several legal challenges, as the original IPI proposal itself was never successfully implemented either.