The Massachusetts Health Policy Commission has released its analysis of state PBM activity titled, Cracking Open the Black Box of Pharmacy Benefit Managers. Notably, the report concludes the need for additional PBM oversight and scrutinized the practice of PBM spread pricing.
According to the report, PBM spread pricing practices appear to be increasing in Massachusetts: “…this practice covered 22% of PBM compensation in 2014, but rose to 54% in 2016. This practice, often used as a means of payment for PBM services instead of administrative fees, may have significant impacts on public insurance programs, employer health plans, and consumers. Additionally, the media has reported growing concerns from pharmacists about low reimbursement rates from PBMs in Massachusetts and other states. PBM payments to pharmacies are sometimes even below the pharmacy’s acquisition costs of the drugs, which can affect the financial viability of pharmacies and potentially impact access to care. Yet the extent to which PBMs profit from this practice, and on which drugs, remains largely hidden from payers and the public.”
Additionally, the Commission cited, “As part of the fiscal year 2020 state budget strategy on MassHealth drug prices, the Baker-Polito administration proposed a new requirement for PBMs to be transparent about their pricing and to limit PBM margins under contracts with MCOs and accountable care organizations (ACOs), which the administration projects will save $10 million. To advance transparency, MassHealth recently released a bulletin directing MCOs and MassHealth Accountable Care Partnership Plans to obtain and submit to MassHealth drug-specific data from their PBMs including payments to dispensing pharmacies and rebate and administrative payment data.”
Based on recent activities and discussions with Massachusetts, additional PBM policies are forthcoming. Frier Levitt Government Affairs’ (FLGA) forecasting and monitoring services help keep healthcare and life sciences stakeholders “in the know” regarding pending policy and marketplace changes. Forecasting and monitoring helps stakeholders make better strategic decisions so that they no longer just “reacting” to outside changes. Contact FLGA today for forecasting and monitoring services tailored for you and your organization.