Reminder: Pharmacy Network Design Saves Money

Pharmacy benefit managers (PBMs) continue to work every day to lower prescription drug costs, leading to savings of an average of $1,040 per person per year. While PBMs work to leverage competition to lower costs, there have been many common misconceptions surrounding pharmacy networks and how they somehow lead to increased health care costs.

Repeated expert analysis, academic studies, and non-political government agency reports underscore how PBM-managed pharmacy networks lower costs, provide health plan sponsors the ability to offer lower-cost, higher quality and more convenient pharmacy options, and debunk claims that pharmacy benefit companies are reimbursing independent pharmacies at lower rates than other retail pharmacies.

Using flawed reports, such as the Federal Trade Commission's (FTC) recent interim report, to make wide assertions about the entire PBM marketplace will lead to misguided policies that would upend the market and raise health care costs for patients and families. The FTC report itself falls far short of being a definitive, fact-based assessment of PBMs or the prescription drug market.

The report is based on anecdotes and comments from anonymous sources and self-interested parties, and supported only by two cherry-picked case studies that are implied to be representative of the entire market. The report completely overlooks the volumes of data that demonstrate the value that PBMs provide to America's health care system by reducing prescription drug costs and increasing access to medications. The PBM marketplace is competitive, large and diverse with more than 70 full-service PBMs but the FTC chose only to focus on six PBMs.

Take a look at the facts:

Network Design

One way PBMs secure savings is by negotiating with pharmacies that provide a high quality of care and more affordable drugs in exchange for increased business from members in the pharmacy network. A pharmacy network is a group of pharmacies where patients can get their prescriptions filled based on their insurance or health coverage plan.

Health plan sponsors like employers, unions, and state health programs design unique pharmacy networks that balance their members' needs and budgets.

According to a study from the University of Pennsylvania's Wharton School of Business, preferred pharmacy networks in just the Medicare Part D program results in millions of dollars in savings for seniors, Part D plans, and taxpayers. The study found that plans that use pharmacy networks in the program saw a one percent decrease in costs. Taking the Congressional Budget Office (CBO) estimate that Medicare Part D will cost taxpayers $119 billion in 2023, preferred pharmacy networks can save taxpayers over a whopping $1 billion in a single year.

Steering

So-called "anti-steering" proposals would do nothing to lower costs but keep health plan sponsors from being able to provide access to lower-cost, preferred pharmacies, and convenient pharmacy options like mail order. Also called home delivery, mail order allows individuals to get their prescriptions delivered directly to their doors in an affordable, safe manner. For elderly individuals or those who might not be able to travel to get their medications, this helps patients access and afford their prescriptions, ultimately leading to better medication adherence. Mail order pharmacies are projected to save $23.5 billion over the next 10 years.

Other pharmacy options like payer-aligned specialty pharmacies have the technology and clinical experience to enhance the safety, quality of care of patients receiving specialty medications. Pharmacists and physicians at specialty pharmacies offer support to patients with complex medical conditions. Specialty pharmacies will save an estimated $250 billion over a ten-year period 2023-2032.

Pharmacy Reimbursement

A recent report from Dennis Carlton, Ph.D., professor emeritus at the University of Chicago Booth School of Business and former chief economist at the U.S. Department of Justice Antitrust Division, debunked the myth that PBMs are somehow reimbursing independent pharmacies at lower rates and putting them out of business.

Data actually show that reimbursement rates paid to independent pharmacies are generally higher than the reimbursement rates paid to non-affiliated chain pharmacies, for both non-specialty branded drugs (4% higher for independents) and non-specialty generic drugs (24% higher for independents).

Claims that PBMs are using their affiliated pharmacies to raise costs for plan sponsors and members are inaccurate. When comparing the total payments by plan sponsors and members, payments for all drugs dispensed at affiliated pharmacies are roughly 4% lower than payments for the same drugs at non-affiliated pharmacies.

Learn more about pharmacy networksHERE.

See how PBMs work to lower costs for patients, families and taxpayersHERE.

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PCMA is the national association representing America's pharmacy benefit companies. Pharmacy benefit companies are working every day to secure savings, enable better health outcomes, and support access to quality prescription drug coverage for more than 275 million patients.

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