Independents and PBMs duke it out

August 9, 2004

Groups representing independent pharmacies and their nemesis, pharmacy benefit managers, are waging a public relations war to win the hearts and minds of legislators and employers.

 

COMMUNITY PRACTICE

Independents and PBMs duke it out

As sworn enemies, groups representing independent pharmacy and pharmacy benefit managers are waging public relations campaigns to win the hearts and minds of insurers, employers, and legislators in a war in which billions of dollars are at stake.

After years of sniping at each other, the two groups went head-to-head last month when they scheduled rival press briefings on the same day. The National Community Pharmacists Association unveiled a survey showing that the vast majority of healthcare benefit decision-makers at small and medium-sized companies don't have a clue about what PBMs actually do. At the same time, the Pharmaceutical Care Management Association trotted out an analysis projecting that PBMs would save $1.3 trillion on drug costs over the next decade.

Expanding its drumbeat that PBMs hide behind business practices that benefit primarily their own kind, NCPA released a survey conducted by Penn Schoen & Berland Associates Inc. The firm conducted telephone interviews in June with 231 healthcare decision-makers in small and medium-sized businesses.

The survey found that 96% of those polled stated their firm's Rx benefit is bundled with their overall health insurance packages. More than half (52%) said they have no idea what PBMs might do to cut cost, 29% said PBMs do provide cost-cutting strategies, and 19% said PBMs don't provide useful cost-cutting strategies. While 65% said PBMs offer mail order, only 4% said mail order is mandatory. Ninety-six percent said giving employees a choice of pharmacies is important. And 65% said that state insurance commissioners should regulate PBMs.

"Given the dominance and huge market share of the PBMs, these findings further illustrate the lack of necessary checks and balances for these entities," said NCPA executive VP-CEO Bruce Roberts, R.Ph. "Our greatest concern is that PBMs play a dominant role in the healthcare system, but there is virtually no private-sector monitoring or other regulation to govern their practices."

In another Washington, D.C., venue, PCMA headlined a PricewaterhouseCoopers analysis of projected drug expenditures over the next decade that included PBM-generated savings of $1.3 trillion. But the real PCMA take-home message was that legislators who want to impose regulation on PBMs are risking the cost savings the industry brings to the healthcare marketplace.

"With an estimated $1.3 trillion in savings over the next decade, PBMs are helping to free up resources that can be used to enrich existing benefits, cover the uninsured, create new jobs, and fund other priorities," said PCMA President-CEO Mark Merritt. "At the same time, these data should be a sobering reminder to policymakers about the consequences of undermining PBMs' tools and techniques."

On the same day as the dueling press briefings, Medco Health Solutions launched a PR campaign to buff up its reputation, which has been tarnished by several state and federal investigations and lawsuits over alleged fraud tied to its business practices. Medco's effort included two-page color ads in the New York Times and Wall Street Journal. As if confirming NCPA's finding that only 16% of the benefit buyers polled could identify Medco, the PBM said it was embarking on a "knowledge" campaign dubbed "Extra-Strength Solutions," which includes the ads, symposia, white papers, and direct-mail communications.

"When you manage the pharmaceutical spending of more than 60 million Americans and you find your industry awareness among key stakeholders barely a blip on the radar screen, it's time to take action," said Jack Smith, Medco's chief marketing officer. "It's time to demystify the management of this healthcare cost, and an ad campaign alone isn't the solution. The solution is expanding the public's knowledge of the industry."

The day after the pro-PBM analysis was released, reporters sought comment from NCPA senior VP of government affairs-general counsel John Rector. Given the PBMs' already huge share of the private insurance market and the Medicare Rx benefit windfall Congress handed to them, he said the newsies were wondering out loud, "Didn't those guys win?" He added, "The PBMs are behind the eight ball because there is growing awareness among policymakers, key Congressional staffers, and members that Congress bought a pig in a poke. And maybe PCMA is worried about the PBM function being outsourced to India."

Carol Ukens

 



Carol Ukens. Independents and PBMs duke it out.

Drug Topics

Aug. 9, 2004;148:20.