Panel Begins Crafting PBM Standards

By Staff Report

Aug. 16, 2006

The latest effort to make more information about pharmacy benefit managers available to employers began July 25 when a committee of industry participants and observers began work on a set of standards that PBMs must meet in order to receive an industrywide seal of approval.

The meeting came a day after 10 PBMs—including two of the largest, Medco Health Solutions and Caremark Rx—agreed to pass on their rebates and follow a set of standards detailed by a 56-employer purchasing coalition created by the HR Policy Association. Members of the group include Caterpillar and IBM.

During the past five years, however, PBMs have come under attack for not acting in the best interests of their clients, particularly for not disclosing sweetheart deals with pharmaceutical companies and not passing savings from rebates on to their clients.

Despite fierce resistance from PBMs, insurance companies and chambers of commerce, laws governing the industry have been passed in several states and proposed in 24 others, much to the delight of doctors, drugstore chains and pharmacists.

Supporters say both the certification and accreditation will allow the marketplace to police itself.

“Mandates simply drive up the cost of doing business with PBMs for everyone,” says Marianne Fazen, who is part of the National Business Coalition on Health and a board member of URAC, the organization that will manage the accreditation program.

Some provisions in state laws could find their way into the accreditation process, says Debra Friedman, senior vice president at URAC. One of the more comprehensive laws passed in 2003 in Maine addresses the issue of transparency by requiring all PBMs to pass discounts on to customers.

That provision would not likely become an accreditation standard because “it would be too prescriptive,” Friedman says, though it is a part of the 56-employer coalition standards for certification.

Fazen says receiving rebates is “not the issue.” She would like to see standards that detail how PBM services are calculated. “The issue is, where is the money coming from and where is it going?” she says.

At the core of the Maine law is a provision requiring PBMs to act in the best economic interest of their customers, says one of its architects, Sharon Treat, a former Maine state legislator who is now executive director of the National Legislative Association on Prescription Drug Prices, a nonpartisan group working to reduce prescription drug prices.

Employers would like to see the concept of the fiduciary duty of PBMs adopted as part of an accreditation requirement, Fazen says.

PBMs, for their part, have a lukewarm attitude toward accreditation. Medco says it would support accreditation that “would highlight industry best practices,” but could not commit to participating in creating the standards. Once the standards are detailed this fall, the public will have a chance to comment.

Jeremy Smerd

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