Pharmacists Lobby States to Step Up PBM Regulation
Pharmacist groups have begun lobbying states to increase regulation of pharmacy benefit management firms, whose role in drug delivery has increased significantly in recent years as health plans and states have looked to rein in costs, the Wall Street Journal reports. Pharmacy benefit managers, or PBMs, contract with health plans and self-insured plans to develop drug benefit packages for patients, directing them toward certain medications or classes of drugs in return for a rebate from drug manufacturers. In addition, most PBMs operate licensed "mail-order drug refill services" and call centers that offer advice to doctors about switching a patient's medication. With the "rapid growth" in drug costs, many states have contracted with PBMs to develop drug packages for their Medicaid and state employee programs. And in July, President Bush proposed a prescription drug discount plan for seniors that would be managed by PBMs.
Pharmacists say that PBMs need regulation to "protect consumers," and the National Community Pharmacists Association has developed model legislation that would require state boards of pharmacy and insurance commissioners to develop a license "specifically for PBMs," with the state boards responsible for oversight. The legislation would also prohibit PBMs from disclosing "confidential claims information on individual patients." Currently, PBMs compile claims data to analyze drug usage trends, and then may sell that information to drug manufacturers. The model legislation also would require PBMs to release financial data to state insurance agencies. "They are getting into the practice of pharmacy and therefore should be regulated," Todd Dankmyer, senior vice president of the pharmacists association, said. Still, Texas Pharmacy Association CEO Jim Martin "concedes" that competition is "fueling" the push for regulation. PBMs have cut into independent pharmacists' profits, for instance, by "threatening" to send their clients "elsewhere" unless pharmacists lowered dispensing fees and by operating their own mail-order drug refill services. The pharmacists' lobbying efforts have been endorsed by state regulators -- in May 2000, the National Association of Boards of Pharmacy, which represents all 50 state pharmacy boards, recommended that PBMs be licensed to "regulate their pharmacy practice activities." But according to Carmen Catizone, the association's executive director, efforts to adopt the recommendation have been met with "stiff opposition" from PBMs.
The PBM industry, "which delivers prescription-drug benefits to 170 million people nationally," says that the regulations proposed by pharmacists would create "an unnecessary layer of rules," the Journal reports. In addition, PBMs say that increased regulation would limit their ability to reduce state drug costs. Peter Harty, a vice president at Merck-Medco, a PBM subsidiary of Merck & Co., said, "We are not cowboys willy-nilly doing things without oversight." Responding to pharmacists' concern that PBMs' data collection practices could violate patient privacy, Harty added that HHS is "developing rules to prevent disclosure of patient-specific data" (Gold, Wall Street Journal, 9/5).