New Report: Generics, Not PBMs, Key Driver of Lower Prescription Drug Spending

WASHINGTON, July 18, 2018 /PRNewswire/ -- Despite the public relations battle cry among pharmacy benefit managers (PBMs) that they are the primary causal drivers of lower prescription drug spending, a new report by health economics and policy firm Dobson | DaVanzo & Associates (DDA) finds, in fact, that generic conversion, increased consumer utilization of generic medications, and more manufacturer competition are the “key primary drivers that have helped to curb prescription drug spending” in recent years.

As part of an investigation into the relationship between “generic conversion” (the ongoing shift in prescription drug utilization from brand-name to generic drugs as brand-name drugs lose their patent protection) and health care spending, DDA conducted a review of the Centers for Medicare & Medicaid (CMS) Office of the Actuary (OACT) analyses of national prescription drug spending between 2010 and 2016. The report was funded by the Senior Care Pharmacy Coalition (SCPC).

States the report: “The ongoing shift in prescription drug utilization from brand-name to generic drugs as the brand-name drugs lose their patent protection has been an important contributor to slowing national prescription drug expenditures during the recent past and will continue to be an important driver to lower drug spending in the coming years.”

Alan G. Rosenbloom, President and CEO of the Senior Care Pharmacy Coalition (SCPC), said the findings demonstrate the impact of generics on slower growth in drug spending between 2010-2014 and the accelerating growth in drug spending between 2014-2016 due significantly to rising specialty drug costs.

“It is critical to note that the dominant specialty pharmacies are owned by or affiliated with the three major pharmacy benefit managers (PBMs) -- Caremark, ExpressScripts, and Optum -- and we maintain these middlemen unfairly leverage each organization’s related businesses to the detriment of long-term care (LTC) pharmacies and the seniors they serve,” Rosenbloom said.

“Congress designed Medicare Part D on free market principles and has protected this free market predicate, however PBM market concentration -- as well as vertical and horizontal integration across many elements of the nation’s health care delivery system and drug distribution chain -- have transformed Part D into an anti-competitive, oligopolistic marketplace,” Rosenbloom continued. For LTC pharmacies, he said, these three PBMs process nearly 90% of all prescriptions.

In response to the Trump Administration’s initiative seeking concepts to address soaring consumer drug prices, SCPC submitted policy and reform recommendations to the U.S. Dept. of Health and Human Services (HHS) suggesting, among other ideas, that prescription drug plans (PDPs) and PBMs treat affiliated corporations operating retail, mail order, specialty or LTC pharmacy the same as unaffiliated pharmacies; require complete transparency from PDPs, PBMs and affiliated corporations, particularly pharmacy companies; and impose an explicit fiduciary duty to consumers on PBMs.

Separately, writing in Forbes, Dr. Wayne Winegarden noted the DDA report, and suggested that, “Since PBMs are not controlling overall expenditure growth, but impose unnecessary burdens on the health care system, comprehensive PBM reform is warranted.”

The Senior Care Pharmacy Coalition (SCPC) is the only national organization exclusively representing the interests of LTC pharmacies. Its members operate in all 50 states and serve 750,000 patients daily in skilled nursing and assisted living facilities across the country. Visit seniorcarepharmacies.org to learn more.

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SOURCE Senior Care Pharmacy Coalition