AMA calls for state regulation to rein in pharmacy benefit managers

Drugs prescription pad
The AMA wants to see state insurance departments regulate PBMs. (Getty/LIgorko)

It’s time to rein in pharmacy benefit managers, according to the American Medical Association, which adopted a policy at its annual meeting Monday calling for patient protections on the lightly regulated industry.

The AMA called for increased oversight with more state regulation and greater transparency as pharmacy benefit managers (PBMs) play an increasing role not only in drug pricing but also in administering patient drug benefits.

The AMA approved a new policy, as part of a report adopted at its annual meeting in Chicago, responding to PBMs, which it described as middlemen operating in a “black box” with limited transparency. “As drug prices rise year after year, the AMA is concerned that the rebate process results in list prices above what they would be absent rebates, as neither PBMs nor manufacturers have an incentive to lower list prices,” the physician organization said in a statement.

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The report recommends state departments of insurance actively regulate PBMs. On the federal level, the new policy calls for PBMs, like health plans, be subject to federal laws that prevent discrimination against patients including those related to discriminatory benefit design and mental health and substance use disorder parity.

The new AMA policy supports applying manufacturer rebates and pharmacy price concessions to drug prices at the point-of-sale to benefit patients, who rarely see the negotiated discounts that PBMs strike with drug companies and health plans. In addition, the new policy supports improved transparency of PBM operations, including disclosing financial incentive information and formulary information.

“It’s time to pull back the curtain on pharmacy benefit managers and how their practices negatively impact patients. How is it that PBMs and health plans profit from negotiated discounts on prescription drugs, while patients pay co-pays based on high drug list prices that even the plans themselves are not paying?” said Russell Kridel, M.D., a member of the AMA Board of Trustees. “Because of market concentration and lack of transparency, patients and physicians are essentially powerless in the face of PBM pricing and coverage decisions.”

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The AMA’s House of Delegates also adopted other new policies during its first day of voting at its 2019 annual meeting including the following:

Action to help prevent anti-transgender violence. The AMA adopted a plan to help bring national attention to what it says is an epidemic of violence against the transgender community, especially physical dangers faced by transgender women of color.

Support giving mature minors the ability to consent to vaccinations. In response to the emergence of vaccine-preventable diseases in the United States, including measles outbreaks, the AMA voted to support state policies allowing minors to override their parent’s refusal for vaccinations. Under the new policy adopted by the nation's physicians, the AMA will encourage state legislatures to establish comprehensive vaccine and minor consent policies.

Greater outreach to help human trafficking victims. The AMA policy acknowledges the unique and critical role doctors have in preventing human trafficking. It supports the posting of signs, notices, posters, placards and other educational material in local clinics, emergency departments and other medical settings to provide information about reporting human trafficking activities or provide information that connects victims and survivors with assistance. 

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