Pharmacy Benefit Managers Prepared to Tackle COVID-19

Pharmaceutical Care Management Association (PCMA) president and CEO JC Scott issued a letter to the Trump Administration’s COVID-19 Task Force affirming pharmacy benefit managers’ (PBMs) readiness to tackle the COVID-19 outbreak. 

On behalf of the pharmacy benefit manager industry, PCMA affirmed their commitment to support public health agencies, collaborate with healthcare providers and first responders, and work closely with American businesses, labor unions, and government programs to ensure families, seniors, and those with disabilities receive the treatment they need at an affordable cost.

“We recognize the essential role that prescription drugs play in helping hundreds of millions of Americans maintain good health. Patients should have the confidence that adequate prescription drug supplies continue to be available,” Scott said in the letter. “If a shortage for a specific medication does occur, PBMs will work with the patient, his or her prescriber, and health plans to identify a covered therapeutic alternative.” 

Pharmaceutical benefit managers play a major role in the pharmaceutical supply chain and greatly impact prescription drug costs. They handle most aspects of the drug purchasing process on behalf of private payers, federal and state programs, large employers, and other payer types, according to the Commonwealth Fund. 

PMBs also have two important functions: managing health payer drug formularies and negotiating drug prices and rebates with prescription drug manufacturers. They maintain relationships with three main stakeholders in the pharmaceutical supply chain including:

• PBM and drug manufacturer
• PBM and health payer
• PMB and the pharmacy

The PBM will negotiate drug prices and rebates from the manufacturer and in exchange for rebates, the PBMs will advertise certain drugs to ensure drug manufacturers receive business.

PBMs also manage a payer’s drug formulary list, and in exchange, the payer gives the PBM money for administrative services. Drug rebates from the PBM from the manufacturer should factor into the total the payer owes. 

In some cases, a PBM will contract with a pharmacy to dispense drugs directly and will charge the pharmacy a drug dispensing fee. 

Over time, there have been concerns that PBMs are distorting the prescription drug market, with questions surrounding a price increase to allow for larger rebates to PBMs.  

An examination of annual reports of 13 major drug companies from 2011 to 2016 found that net revenues for the pharmaceutical firms grew by an average of 2.7 percent annually and rebates and other price concessions increased by 15 percent annually. 

Therefore, payments to PBMs and other intermediaries grew disproportionately to manufacturer net income, researchers from Stanford found.

But pharmacy benefit managers have experience in boosting prescription drug access in the event of natural disasters such as floods, wildfires, hurricanes, and tornadoes. “We have learned from previous regional and global healthcare events, such as Zika, Ebola, and the h1N1 virus. We prepare annually for recurring healthcare events, including the influenza season,” Scott stressed.

It is vital that pharmacy benefit managers keep close partnerships between public and private-sectors to work through the COVID-19 challenges. 

“Our companies are fully prepared to provide early access to prescription refills, access to therapeutic alternatives in the event of COVID-19 related shortages, and address pharmacy access barriers in collaboration with policymakers, clinicians, payers, and other essential partners. Upon approval of a vaccine or specific treatments for COVID-19, our companies will work with plan sponsors to provide appropriate access for patients,” the letter from PCMA concluded.