MESSAGE
| DATE | 2017-06-11 |
| FROM | Ruben Safir
|
| SUBJECT | Subject: [Hangout - NYLXS] PBMs and Rebates... lets not just blame Abbott
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Wyden’s C-THRU Act – Publicizing PBM Rebate Data
By Tara Dwyer on March 21, 2017
Posted in Health Care Reform, Medicare Part D, Payors & PBMs,
Pharmaceuticals, Pharmacies
Last week, Senate Finance Committee Ranking Member Ron Wyden (D- Ore.)
introduced the “Creating Transparency to Have Drug Rebates Unlocked
(C-THRU) Act of 2017.” As its name suggests, it seeks to require
parties (e.g., PBMs) that contract with pharmaceutical manufacturers for
drug rebates to be more transparent regarding the rebates they receive
on behalf of their health plan clients, specifically Part D plans and
qualified health benefit plans that participate on ACA Exchanges
(“Exchange Plans”). The Act would: (1) require the Secretary of the
Department of Health & Human Services (HHS) to make available on its
website the PBM transparency data submitted by PBMs that contract with
Part D Sponsors or Exchange Plans, (2) require the Secretary of HHS to
adopt a minimum percentage of drug rebates that a PBM would need to pass
through to its Part D or Exchange Plan clients, and (3) amend the
definition of negotiated price under the Part D program to change what
price concessions would have to be reflected at the point-of-sale. This
post focuses on the first two changes. The third change will be
addressed in a separate post.
Publishing PBM Rebate Data
Section 1150A of the Social Security Act currently requires PBMs that
contract with Part D plans and Exchange Plans to provide to its plan
clients aggregate data regarding the rebates, discounts or price
concessions that the PBM negotiates that are attribute to patient
utilization. PBMs must also report to its plan clients the aggregate
difference between what the PBM pays pharmacies for drugs and what the
PBM charges the plan client for drugs. These two disclosures cover
both areas where a PBM can potentially retain “spread” – rebates and
pharmacy pricing.
Section 1150A currently prohibits HHS from disclosing the submitted
information except under certain circumstances. When HHS is permitted
to disclose the information, it must be “in a form which does not
disclose the identity of a specific PBM.” C-THRU ignores this
prohibition (but does not delete it) and instead requires HHS, in a new
subsection, to publish on its website the information submitted by each
PBM, so that parties can compare PBMs’ ability to negotiate rebates,
etc. The new subsection appears to be in direct contrast with the
prohibition forbidding the disclosure of data in a manner that
identifies a specific PBM and requires HHS to publically disclose PBMs’
competitively sensitive information. While the new disclosure
requirement continues to prohibit disclosure of information that would
identify the drug or plan to which the information relates, some
individuals in the industry have suggested that the disclosure required
by subsection (e) would give manufacturers an edge in negotiating rebates.
Adopting a Minimum Percentage
C-THRU would require a PBM to pass through to its Part D or Exchange
Plan client a minimum percentage of the aggregate rebates, discounts or
price concessions that the PBM “negotiates that are attributable to
patient utilization under the plan.” The minimum percent would be
adopted by HHS.
Many plans prefer a full pass-through pricing/rebate model and as a
result, many, if not all, PBMs offer that option. It is unclear how
setting a minimum percentage assists plans or members if the minimum
percentage would in almost all instances be below what most PBM
arrangements currently achieve. Further, at a high level, PBM services
can be paid for in two ways, through administrative fees and through
pricing/rebate spread. Many plans prefer a model where the plan
receives the full benefit of the pharmacy pricing negotiated and rebates
received by its contracted PBM, and in return, pay a higher
administrative fee for the PBMs services. However, some plans prefer
that the PBM retain a portion of the rebates or difference in pharmacy
pricing in return for lower administrative fees. Should that option be
taken off the table?
Finally, as currently drafted, the bill refers to the rebates, discounts
or price concession that the “PBM negotiates.” For purposes of
determining the minimum percentage, what a PBM “negotiates” versus what
it “receives” can be different. First, depending on the point in time
the measurement is taken there can be a significant difference because
many rebate contracts result in rebates being paid three to six months
after the close of a plan year which can be almost eighteen months after
the actual patient utilization. Second, manufacturer rebates require a
significant amount of data from a plan and/or PBM and discrepancies and
disputes can arise regarding: (i) what utilization qualifies for a
rebate, and (ii) what rebate percentage the utilization is qualified
for. The bill does not address these issues and could result in a PBM
inadvertently missing the minimum percentage because of differences in
determining the price concessions that the PBM negotiates.
https://www.healthlawpolicymatters.com/2017/03/21/wydens-c-thru-act-publicizing-pbm-rebate-data/
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