Drug price reporting rules foiled by supply chain loopholes

US transparency rules for drug and health costs are blocked by interlocking trade agreements between insurers, pharmaceutical liaisons and other companies, some of which are overseas.

These are observations taken from industry comments on a multi-agency rule (NRI 0938 AU66) designed to give employers and insurers a window into the pricing of the care they pay for. Entities at every stage of the supply chain say they need more information about what other companies in the system are paying.

The reporting requirements came into effect in December and regulators want information on how to clarify the rules. The government will publish biennial public reports on prescription drug price trends and their impact on premiums and out-of-pocket payments starting in 2023.

One problem is that some companies in the chain are not giving up their data because they are overseas and can avoid US regulatory scrutiny. Pharmacy benefit managers (PBMs) who manage health insurers’ prescription drug benefits often do business with group purchasing organizations to control costs, and these organizations often operate outside of the United States.

To complicate matters further, the largest PBMs are owned by large health insurers, said Shawn Gremminger, director of health policy at the Buyr Business Group on Health. The group suggested that the Department of Health and Human Services extend drug price transparency requirements to organizations outside the United States, in a commentary. letter on the ruler.

The PBGH is a nonprofit coalition of nearly 40 public and private organizations that spend nearly $100 billion annually to cover approximately 12 million employees and their family members. In 2021, he launched his own pharmacy benefits manager, EmsanaRxat the service of employers.

Employers fear drug costs could be inflated by “insider trading” as affiliated entities mark up prices through a chain of interactions and then sell them to employers’ plans, Gremminger said. Employers want to know prices every step of the way, he said. Large group plans want more transparency about how much PBMs pay for drugs versus what they charge employers.

Accuracy is a challenge

At the same time, employers are struggling to meet their reporting obligations, which include a wealth of information about the most expensive drugs they pay for, drug price increases, drug reimbursement claims, as well as their expenditure on specific health services, such as hospitalization costs, primary and specialist care.

Employer plan sponsors “have little or no way to verify compliance or access reported data, but they are ultimately held accountable for the accuracy and completion of reporting,” said the ERISA Industry Committee. noted in a comment filed with consultant Mercer. Plan sponsors cannot afford to report their information if their plan administrator or PBM does not do so for them, they said.

ERIC, which represents large employers on employee benefit policies, called on regulators to impose “reasonable cooperation requirements” on PBMs, plan administrators and insurers who administer health plans. The groups have suggested the rule be revised to confirm that disclosures by brokers and consultants to employer-sponsored health plans include data on drug benefits and drug costs.

Employers should be able to get more information about the prices paid by their own plans, said Katy Johnson, senior health policy attorney at the American Benefits Council. Plan sponsors sometimes struggle to get information about rebates paid to their drug benefit managers, she said.

Agencies currently allow PBMs and third-party administrators to aggregate their information across all of their health-insured populations, Johnson said. “So that means I won’t necessarily get specific shot-by-shot information.” If a plan sponsor wants their own plan-specific information, they should be able to get it to make plan design decisions, the CBA said in its letter. The CBA represents large employers who sponsor employee benefits such as health care and pension plans.

Insurers say they don’t know what employers are paying. AHIP, which represents commercial health insurers, noted its members do not have information on the share of premiums that employers pay on behalf of their employees. “The plans have no way to separate the amount employees contribute or the information to derive it.”

“Net Zero Impact”

The PBM industry counters that it shouldn’t report anything. The Pharmaceutical Care Management Association, which represents PBMs, said in its commentary letter that the rule goes beyond the agencies’ statutory authority and called for “amounts withheld by PBMs” to be excluded.

“As a form of PBM compensation, amounts retained by PBMs and not transferred to the plan have a net zero impact on premiums,” he said.

Other industry sectors say they need to know what PBMs charge and spend on drugs. Pharmaceutical Research and Manufacturers of America (PhRMA), which represents drug manufacturers, noted “PBMs and health plans typically do not share manufacturer discounts directly with patients at the point of sale. Instead, plans and PBMs can take advantage of these substantial discounts while often requiring patients to pay high deductibles and coinsurance based on a drug’s full list price.

PhRMA said regulators should require adequate data to accurately understand how much health plans and PBMs are spending on prescription drugs.

Direct reductions

The Campaign for Sustainable Rx Pricing (CSRxP) noted Drug manufacturers should be required to report the discounts they offer to low-income patients. The group says these patient assistance programs are often a tactic “to increase sales” of a particular drug. Making these discounts public “would better ensure that third-party assistance directly benefits patients and does not just cover up unnecessarily high drug prices.”

Jon Conradi, group communications director, said drugmaker list price transparency was also a priority. “We’ve seen the public pressure that comes with a brand name company having to defend or justify the prices they set either as introductory prices for new drugs or as price increases on products,” he said.

He cited the price reduction recently announced by biogenic for its Alzheimer’s drug Aduhelm. Biogen initially priced the drug at $56,000 a year, but later cut the cost in half after HHS ordered a review of Medicare premium hikes tied to the drug.

Abdul J. Gaspar