Thirty Employers Join Together To Monitor Pharmacy Benefit Manager Medco
Thirty large employers on Thursday announced that they have formed a group called Rx Collaborative that will monitor the practices of pharmacy benefit manager Medco Health Solutions and work to reduce prescription drug spending, the New York Times reports. PBMs, which work with drug companies to obtain discounts on medications, control 75% of drug purchases by employers' health plans and insurers, according to the Times.
Many employers have a "hard time figuring out where" the rebates PBMs receive from drug makers go, the Times reports. Medco in April 2004 agreed in a settlement with 20 state attorneys general and the Department of Justice to inform companies about the payments it receives from drug makers to convince physicians to prescribe certain medications, the Times reports. Through the Rx Collaborative, companies -- such as Eastman Chemical, Mattel, Unocal and ING Americas -- will use an independent auditing firm to monitor Medco's revenues, as well as "important, rarely disclosed information like payments made by the drug makers for information on product purchases by doctors and consumers," the Times reports. Each company will pay Medco a monthly fee for each enrolled employee, plus a dispensing fee for mail-order drugs.
The alliance is expected to save participants at least 6% of a combined $800 million in pharmaceutical costs, or $50 million during the first year, by using 100% of discounts and manufacturers' rebates and by gaining additional control over products and prices. The group also expects that special access to Medco information will help employees choose appropriate and cost-effective medications, the Times reports (Freudenheim, New York Times, 2/3).