LUGPA advocacy supports legislative efforts addressing the role of PBMs

In this interview, Mara R. Holton, MD, highlights legislation that LUGPA currently supports to help lower patient costs. Holton is a urologist and managing partner at Anne Arundel Urology in Annapolis, Maryland.

Mara R. Holton, MD

Could you describe some of the current payer policies that exist and how they affect patient access to care?

Pharmacy Benefit Managers (PBMs) are third party companies that function as intermediaries between insurance providers and pharmaceutical manufacturers. PBMs help to establish and maintain lists of formularies, [or] covered medications on behalf of insurers, who then theoretically pass the savings and discounts onto discounts on to patients.

As there has been increasing consolidation between PBMs, insurance companies, and specialty pharmacies—the locations from where medications are often now dispensed—the cost that the insurer and pharmacy pay for medications has become increasingly less transparent, and formularies have become increasingly more restrictive as far as where and which medications can be accessed by a patient. Concurrently, patients have seen prescription drug costs rise precipitously in the last 5 to 10 years. Unfortunately, the complicated PBM/insurer arrangement policies seem to be contributing significantly to financial toxicity as it pertains to pharmaceutical costs for patients.

How do these affect urologists and their ability to provide the appropriate treatment?

The provider/patient relationship is special. Providers choose their medication recommendation for each individual patient for a number of reasons, including a patient’s condition, their preferences and treatment priorities, allergies and other medical conditions and medications, amongst other factors. But increasingly, what providers find is that the single most significant factor that determines what medication a patient ultimately gets is on the insurance companies formulary and the resultant cost limitations of drugs. This represents a dangerous intrusion into the ability of patients and providers to work collaboratively to establish the most optimal pharmacologic alternative to treat that condition in that patient.

Could you discuss some of the legislation that LUGPA currently supports surrounding PBMs?

There are burgeoning conversations in Congress, both on the House (Ways and Means and E&C) and the Senate side (Senate Finance), addressing PBMs’ transparency in their negotiations and pricing. [There are] attempts to address what's called spread pricing, which speaks to transparency and to the profit margin that PBMs get for medication. There are several proposed bills including the PBM Transparency Act (S. 127) and a number of House bills (H.R.2816, H.R. 3281, among others). Fundamentally, all of these statutory initiatives are designed to promote transparency, limit profits, and ensure that rebates are passed along to the consumer rather than increasing the profit margin for the PBM.

Also, along with that legislation are some efforts to ensure that patients have broader access to medications, including limitations on step therapy requirements and prior authorization reform proposals. It is also with these types of hurdles that PBMs and insurance companies limit the individual drugs that patients can access, and also how they are ablet to access their meds through their pharmacy benefits.

What other legislative efforts does LUGPA support to reduce patient costs?

Step therapy is something that LUGPA has been very aggressive in following for quite some time. Essentially what step therapy does is demands that a provider try a therapy designated by the insurance company prior to approval for the provider’s recommended therapy, typically, [for a] potentially higher level, more specific, or more sophisticated [drug]. Again, this inhibits and intrudes on the provider/patient relationship, where the idea is that the provider and the patient are negotiating and developing a treatment plan based on what they believe [is] the best drug for that patient. Step therapy essentially comes in and turns that on its side and says, "Well, this is the drug you have to try first." There's been quite a lot of conversation for several years, and LUGPA is always engaged in efforts to make it clear that step therapy is a profoundly misguided strategy. [It is a] massive overreach on the part of insurance companies to interfere in the patient/provider relationship.

[Additionally,] hospital price transparency has been a primary focus for the past several years. In this Congress, there has been increasing attention to enforcement of the hospital transparency regulations which CMS set forth a few years ago. Despite those mandates, hospitals have largely failed to create accessible and clear listings and postings of prices on their website. In fact, several large studies have demonstrated that, in the majority of cases, this information still is not available in a way which is easily accessible for consumers. Attempts are being made now to create enforcement tools, including penalties to create a financial incentive for hospitals to comply with the laws.

Is there anything else you'd like to add?

We know that patients are experiencing increasing costs of health care, and certainly pharmacy is a large component of that. We also know that there's been increasing consolidation between PBMs and insurance companies and PBMs and specialty pharmacies, and there is essentially zero transparency to the negotiations between these entities that result in the drug formulary choices and downstream patient costs. The PBMs theoretically would be passing these savings benefits on to the insurance companies, and then the insurance companies would be passing the benefit on to the consumer in the way of lower premiums. But if the insurance companies own the PBM, and then the PBM owns the pharmacy, those incentives are not aligned. PBMs are a problem because of misaligned incentives. This creates unnecessary complexity, patient and provider impediments to care, and eliminates access even further by making independent pharmacies increasingly noncompetitive. All of this further degrades the patient experience and damages the patient/provider relationship and makes care more halting, more arduous, and less effective. This impedes the ability of providers and patients to form meaningful treatment plans in concert with each other.

Additionally, in some cases, the PBMs are paid what are called rebates. The rebate amount is established based on the cost of a drug, so a PBM may actually be incentivized select a drug that ultimately costs the patient more in retail price because their rebate is proportionately larger. That's not just misaligned, it is a totally distorted incentive.

From a LUGPA vantage point, we are extremely excited to see the significant congressional attention to PBMs. We genuinely believe that transparency from a hospital price vantage point [and] from a drug acquisition vantage point can only benefit consumers and taxpayers who ultimately bear the cost of the Medicare portion of this. It's been very gratifying to see a lot of congressional activity on this this year, and we are very hopeful that patients will get some meaningful reform and some relief to the escalating burden of health care costs.