Moody’s: Pharmacy benefit managers face uncertainty

As payers and government officials call greater attention to rising drug prices, the pharmacy benefit management sector is facing uncertainty as it, too, has become the focus of increased scrutiny, according to Moody's Investors Service.

In fact, a recent investigation indicated that federal prosecutors are increasing their scrutiny of potential False Claims Act violations within agreements between PBMs and drug companies. Some pharmaceutical industry executives have also argued that the rebates PBMs receive from negotiations with drugmakers can actually lead manufacturers to increase prices.

Payers are putting pressure on PBMs as well. Anthem, for instance, earlier this year filed a lawsuit against Express Scripts to recover "damages" it said it lost because the PBM company failed to pass on prescription drug savings. 

The Moody's report (reg. req.) didn’t change its credit rating for that sector, but said pharmacy benefit managers (PBMs) could face changes in how they do business as payers and legislators take a hard look at how they operate.

"If any legislative and reimbursement proposals aimed at reining in drug prices take hold, we believe they would erode the value of the pharmacy benefit manager model," Diana Lee, a vice president and senior credit officer at Moody's, said in an announcement.

Federal and state government proposals to control drug costs could impact how drug prices are negotiated or reimbursed, which would affect how PBMs fundamentally operate, according to the report. Proposed legislation also goes beyond current rules for drug price transparency, adding another wrinkle.

It’s likely that PBMs will continue practices like restricting certain drugs from their formularies to cut costs, but because of increased public conversation about drug prices, it’s likely that both clients and regulators will work to make sure PBMs make decisions that are cost-effective for the consumer, not just for themselves, according to Moody’s.

PBMs should also be aware of moves from the Health Transformation Alliance, according to the report, as that organization shows how concerned employers are about rising drug costs. HTA also wants to drill down into how PBMs purchase and pay for prescription medications to reduce costs, so its proposals could also significantly affect how PBMs do business.