04/05/2017

Prescription Drug Price Transparency Act Introduced

Congressman Doug Collins (R-GA) has introduced the Prescription Drug Price Transparency Act (H.R. 1316) to tackle the abuses of Pharmacy Benefits Managers (PBMs).

“PBMs have been abusing patients, pharmacies, and taxpayer in the shadows of our health care system for far too long. The result has been rising drug prices and an unnecessary layer of bureaucracy that has a very real – and sometimes dangerous – impact on patient care,” said Ted Okon, executive director of COA.

Over the last decade, many community oncology practices have established in-house pharmacies that provide oral and infused drugs – prescribed by the practice physicians – which are used to treat cancer as well as cancer-related conditions. These in-house pharmacies have emerged as a vital component in the quest to provide patients with high-quality, high-value, and convenient personalized cancer care. In fact, a recent study found that adding in-house specialty pharmacies to cancer centers improves quality of care and reduces medication errors for patients taking oral anticancer therapies.

The growth oligopoly of PBMs in recent years has threatened the high-quality care community oncology practice pharmacies provide by introducing murky and expensive fees (e.g. “DIR Fees”); complex bureaucracies that frequently delay or deny patients needed medications; and limiting patient choice or access to pharmacies.

Additionally, the fees and the discounts PBMs extract from drug manufacturers are raising costs for patients and taxpayers. Because seniors covered by Medicare pay full list prices for Part D drugs — before rebates are applied — they are on the hook for greater costs. The higher prices patients pay upfront push them through and out of the “donut hole” faster, resulting in higher costs for them and Medicare.

PBMs also have a vested interest in keeping list prices high, while extracting more and greater back-end rebates from manufacturers to include their drugs on PBM formularies. Because they charge pharmacy providers percentage-based network fees — up to 9 percent of drug list price — higher drug prices mean higher PBM profits. In fact, a recent Centers for Medicare & Medicaid Services (CMS) report found that the rebates PBMs extract from drug manufacturers have exploded from 11 percent of gross drug sales in 2010 to over 17 percent in 2015. Because these discounts and rebates ultimately get incorporated into drug prices, it fuels them higher for everyone.

Working with PBM experts at the law firm Frier Levitt, LLC, COA has produced two investigatory White Papers exploring the impact of PBMs on community oncology practices. These include an exploration of the PBM CVS Caremark’s efforts to restrict patient access to community oncology pharmacies and a recent investigation into murky “DIR Fees” that PBMs charge practices.