PBM Industry Group Launches Ad Campaign Warning of Higher Costs if Rebates End

The industry group for pharmacy benefit managers (PBMs) launched a public relations blitz in the wake of scrutiny regarding their role in prescription drug prices.

The Pharmaceutical Care Management Association (PCMA) created a print and digital ad campaign called "Protect the Savings," which claims that if a proposal from HHS is finalized, pharmaceutical firms will reap the benefits while taxpayers’ costs rise, as will Medicare drug premiums.

In January, HHS announced a plan to exclude rebates from safe harbor protections that currently shelter drug makers’ rebates from penalties under the federal Anti-Kickback Statute, and said it intends to create new safe harbor for discounts offered to patients, as well as fixed-fee service arrangements between drug makers and PBMs.

And this week, rebates were a prime topic at a Senate Finance Committee hearing on drug pricing, where 7 drug company executives testified about the high prices of their products. Some executives laid the blame for pricing issues with PBMs.

The ads released this week from PCMS defend the rebates as a way of saving money through negotiations with payers, and, using pictures of worried-looking Medicare beneficiaries, say that Part D premiums could rise 25%. America’s Health Insurance Plans, the lobbying group representing insurers, also has said that without PBM-payer contracts, drug prices would be even higher.

"We agree that drug company list prices must be addressed, and that more can be done to increase access and affordability. Unfortunately, this new proposal will not lead to lower prescription drug prices, but could have severe unintended consequences such as destabilizing the Medicare Part D program at a significant cost to taxpayers," said JC Scott, PCMA president and chief executive officer, in a statement. "We should focus on solutions that protect the important role of negotiations and the savings that are critical to keeping down consumer costs, including premiums."

HHS says that the new rule will counteract incentives behind higher list prices; currently, when a list price rises, patients who pay a percentage or all of the list price for a drug see their out-of-pocket expenses increase while PBMs reap financial rewards. According to HHS, rebates that today equal 26% to 30% of a drugs’ list price may be passed directly to patients and reflected in what individuals pay at the pharmacy counter.

While those with commercial insurance will likely need to wait for Congress to act to block rebates from their plans, individuals covered under federal plans like Medicare could see substantial changes to their costs; HHS estimates that one-fourth of Part D plans require coinsurance for preferred drugs, and nearly all use coinsurance for nonpreferred drugs. Furthermore, lower list prices and upfront discounts will translate into savings during the deductible, coinsurance, and coverage gap phases of the benefit.

PCMA, on the other hand, says the proposal will cost taxpayers $196 billion.