PBM industry report claims greater use of tools can generate $1T in savings over next decade

Prescription Drugs and Money image
A pharmacy benefit manager industry-funded report claims that greater use of formulary tools like step therapy and specialty pharmacies can lead to big savings for health plans. (TaxRebate.org.uk)

Pharmacy benefit manager (PBM) tools such as rebates and specialty pharmacies can reduce prescription drug costs by $1 trillion over the next decade, a study commissioned by the PBM industry found.

The study, published Wednesday by pharmacy consulting firm Visante and funded by PBM lobbying group Pharmaceutical Care Management Association (PCMA), argues for greater use of a collection of PBM tools to save money for commercial, managed care and Part D plans as well as beneficiaries.

The study comes as more states pass legislation to scrutinize and regulate PBMs.

“As this analysis indicates, with even greater use of PBM tools, we can achieve more market-based savings to further reduce drug costs for every patient,” said JC Scott, president and CEO of the PCMA, in a statement.

RELATED: CAQH CORE approves 2-day limit for health plans to act on prior authorizations

The study looked at federal drug spending projections from 2018 to 2029 and evaluated the share of out-of-pocket costs associated with copays for prescriptions linked to PBMs and PBM tools.

The tools the study examined include rebates and discounts PBMs negotiate from drugstores and manufacturers, mail-service and specialty pharmacies, drug utilization programs, adherence programs to improve care management and formulary management tools such as step therapy and prior authorization.

Visante estimated that if plan sponsors use the full range of PBM tools, they could save more than 30% on drug benefit costs compared to sponsors that “opt or are required to limit their use of PBM tools,” the study said.

While a majority of commercial plans use prior authorization or step therapy, PBM-funded research found that 38% of plans don't use mandatory generic drug programs and 47% don't use a preferred pharmacy.

RELATED: How CVS is using digital tools to boost specialty pharmacy adherence

Commercial plans would save more than $512 billion and Medicare Part D plans $445 billion, while Medicaid managed care plans would get $46 billion if they fully employed such tools, Visante concluded.

PBM blowback

Critics of PBMs say the report is a “desperate” ploy to stave off more scrutiny of the industry’s practices, which they charge restrict access to care.

“This is a desperate report to basically try to go against the tide to say don’t restrain us,” said Ted Okon, president of the Community Oncology Alliance, which represents cancer patients and independent oncologists.

Congress and several dozen states have passed laws targeting pharmacy “gag clauses” where a PBM prohibits a pharmacy from informing a consumer it would be cheaper to buy a drug out of pocket than through their insurance.

Some states are also eyeing laws to increase oversight and regulations of PBMs.

RELATED: Express Scripts selects first crop of tech tools to include on new digital health formulary

Wisconsin’s state assembly on Tuesday unanimously passed legislation to require PBMs operating in the state to register with state officials. PBMs would face certain price transparency requirements and other regulations such as a ban on charging pharmacists a fee for adjudicating a claim, according to the legislation.

Congress is also considering legislation to curb prior authorization, which providers have identified as a burdensome and onerous process.

The Trump administration also proposed removing the anti-kickback safe harbor for Part D rebates but backed off after concerns about the effect on plan premiums. 

Okon said cancer patients are hurt by formulary management tools such as prior authorization and step therapy that delay or deny access to medication, and the study wants to double down on such tactics.

“The study contains a host of assumptions that are best described as the fox guarding the henhouse,” he said.

Suggested Articles

UnitedHealthcare is the latest big-name insurer to waive members’ cost-sharing for COVID-19 treatments. 

The Trump administration gave guidance for providers on how to split ventilators to be used on two patients at once as demand swells due to COVID-19

HCA Healthcare's CEO announced he will donate pay for the next two months to an employee assistance fund as the system has to cut hours.