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Information Is The Best Medicine

December 17, 2018

There is no magic pill to unravel the convoluted factors that produce prices that consumers pay for prescription medicines at the pharmacy counter. But there are some loose strings here and there — involving transparency and information — that lawmakers and regulators can pull to more fairly treat consumers. State Auditor General Eugene DePasquale released a special report Tuesday detailing some of the reasons for the rapid increases in prescription prices paid by Medicaid, the federal/state insurance program for low-income individuals. Pennsylvania taxpayers paid $2.86 billion for prescriptions to pharmacy benefit managers in 2017, an increase of more than 100 percent over the $1.41 billion they paid in 2013. Much of the report details the operations of the pharmacy benefit managers, subcontractors hired by the state government. DePasquale contends that the PBMs, classic “middlemen” between pharmacies and consumers, drive up their own profits and drug prices through strong-arm contracts with community pharmacists and developing restrictive drug “formularies” and reimbursement rates. PBMs “have ballooned in the shadows of the marketplace, drawing in skyrocketing profits while flexing increasing control over who may access which prescription medicines,” DePasquale said in the report. He also claimed that some big PBMs use their market power to pressure small pharmacies to sell out to pharmacy chains with which the PBMs are affiliated. DePasquale urged the Legislature to emulate those in other states that have increased state regulatory control over PBMs, and even to allow the state government itself to manage Medicare drug benefits rather than subcontracting the business. But amid all of that heavy lifting is a simple potential reform that could save money for patients and taxpayers. Because of the complexity of health insurance and drug pricing, including discount and rebate programs, it sometimes is possible for consumers to save money by paying out of pocket rather than through their insurance. But PBM contracts with pharmacies often include gag rules that preclude pharmacists from telling consumers about potential savings. As a warm-up to tackling the major reforms proposed by DePasquale, lawmakers quickly should pass a law outlawing gag rules in PBM/pharmacy contracts. As in any other consumer transaction, information is the best medicine.

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