Addressing the Recent Spotlight on PBMs

Over the last several years, there has been a lot of anti-PBM press and hundreds of state and federal legislative proposals to reform PBMs. Recently, high-profile media outlets published articles on PBM practices, and the Federal Trade Commission released an interim report on PBMs.

PBMs administer prescription drug claims, negotiate with pharmaceutical companies and pharmacies on behalf of payors, develop networks and formularies to drive patients to higher-value care, offer utilization management programs to help control the cost of providing a pharmacy benefit to plan participants, and help develop plan designs that drive patients to higher-value medications. Much of the anti-PBM messaging has been driven by pharmaceutical companies and independent pharmacies, natural adversaries to PBMs.

There are often flaws in media reports of PBM practices. The recent articles and reports are no different. Inflammatory language, bad reasoning, cherry picking of medications, anecdotal evidence, and weak research are all used to paint a picture that PBMs are bad actors.

This is not to say all points raised in these articles and reports are not without merit. In a complex industry with multiple stakeholders, PBMs can increase their revenue if left unmonitored. Gamesmanship to increase revenue is not limited to the “Big 3” PBMs, or even limited to PBMs.

National CooperativeRx was founded to provide expertise and purchasing power to plan sponsors looking for a better PBM experience. With proper oversight, PBMs can provide great value to patients and plan sponsors looking to get the most out of their pharmacy benefit.

Employers are fed up with high pharmacy costs. We see it in the more than 250 proposals we have received from plan sponsors just this year wanting to know how much money our new contract will save them. This is because National CooperativeRx enhances the PBM experience and solves many of the problems cited in these articles and reports. Through data analysis on our membership, we can investigate accusations and validate that issues identified do not apply to our membership. Membership in National CooperativeRx improves the typical PBM experience through:

• Best-in-Class Contract Terms and Definitions
• 100% Pass-through of Rebates, Broadly Defined
• Industry and PBM Oversight
• Focused Management of the Pharmacy Benefit
• Removal of Fraudulent, Wasteful, and Abuse Spend
• Offering Plan Design Best Practices to Drive High-Value Care
• Transparency

An example, coming out of the FTC report, is prior authorizations. The claim is PBMs approve certain medications for revenue reasons rather than sound clinical judgment reasons. While I question the FTC research cited to arrive at this conclusion, the conflict is clear. Certain PBMs make more money when a medication is dispensed than if it is not.

Beginning in 2023, National CooperativeRx took over the prior authorization process from our PBM for specialty medications. We did this at no additional charge to our membership. These medications are being dispensed, or not, based on sound clinical guidelines and judgment. Revenue to the PBM is never a factor in determining coverage.

Our industry-leading cost and trend metrics have always been key performance indicators of National CooperativeRx. In 2023, our average plan cost, net of rebates, was $1,104 per covered life. Over the last 20 years, the average annual net cost increase for our members was 1.3%.

Despite media claims that drug costs have been increasing every year, National CooperativeRx members, as a coalition, have experienced decreases in net drug costs in seven of the last 20 years. The latest validation of our successful approach comes from our initial 2024 spend data. In the first quarter of 2024, our trend, net of rebates, was -1.2%. While second-quarter rebate numbers are not yet available, data received so far suggests well-managed trend.

Although PBMs operate in a complex industry and games can be played to maximize their revenue, action by plan sponsors can limit this abuse. Being member owned and member governed, National CooperativeRx, and its staff, are fully aligned with the best interests of our membership. As new dynamics in this complex industry arise, we navigate them and put our members in the best position to manage costs and provide robust benefits.

If you have any questions or concerns arising from articles or reports, please reach out to myself or another member of the National CooperativeRx team.