Governor’s Task Force on Prescription Drug Prices Convenes in Milwaukee, Focuses on PBMs

January 23, 2020

Pharmacy benefit managers (PBMs) and their role in the pharmaceutical supply chain were the focus at the Jan. 22 meeting of the Governor’s Task Force on Prescription Drug Prices. PBMs are one component of the supply chain that also includes manufacturers, wholesalers, pharmacies, health plans and beneficiaries. PBMs play a role in the distribution of drugs by negotiating prices with drug manufacturers on behalf of health plans. PBMs receive rebates and administrative fees from drug manufacturers for the services they provide.
 
The task force heard from Dr. Neeraj Sood, professor and vice dean for faculty & research at the Price School of Public Policy, University of Southern California and senior fellow at the USC Schaeffer Center for Health Policy & Economics of the University of Southern California. Dr. Sood described how the pharmaceutical supply chain operates, the dominance of three PBMs over the pharmaceutical market and ways to increase transparency in the interactions among the actors in the supply chain. Dr. Sood noted that while PBMs play a large role in health care, they are mostly unregulated. He recommended greater scrutiny of PBM drug pricing policies and believes more competition is needed throughout the distribution system to ensure savings are passed along to consumers.
 
The task force also heard from Robert Gallé, chief operating officer of IngenioRx, a PBM fully-owned by Anthem. He discussed IngenioRx’s efforts to provide research to clinicians about drug efficacy to assist them in prescribing decisions and showed outcomes that are reducing the cost of treating certain disease states, as well as improving patient health status.
 
Brent Eberle, senior vice president and chief pharmacy officer at Navitus, a PBM created by Dean and SSM about 16 years ago, also presented information to the task force. He said that Navitus sees itself as operating as a pharmacy department of a health plan. Their goal is to be completely transparent about manufacturers’ rebates. Navitus passes rebates through to the health plans rather than using “spread pricing,” in which the PBM charges a payer more than it reimburses the pharmacy for a certain drug and retains the difference, as compensation for the services they provide. Instead, Navitus charges administrative fees to health plans rather than using spread pricing, with the goal of increasing transparency to the health plan.
 
The task force is scheduled to meet next Feb. 19 in Oshkosh and will address the role of health insurers and self-insured health plans in prescription drug pricing. Door County Medical Center CEO Brian Stephens, nominated by WHA, is a member of the task force.

This story originally appeared in the January 23, 2020 edition of WHA Newsletter