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ERIC and GTMRx’s Work to Promote PBM Transparency and Accountability Will Improve the Health Care System for Patients, Providers, and Payers

From the desk of James Gelfand, JD, President, ERIC (ERISA Industry Committee), GTMRx Advocacy Partner

August 3, 2022

In the latest stage of GTMRx’s “Buy Right Strategy,” the Coalition will work with employers, providers, patients and other stakeholders to change the dynamics of the pharmacy benefits management (PBM) industry and reorient PBMs to focus on support for patient-focused, value-added services including comprehensive medication management (CMM).
Employers sponsor health benefits for more than 160 million Americans and pay billions of dollars for prescription drug coverage, yet typically have very limited insight into the effectiveness of their drug benefit programs. This is despite the fact that employers are usually a fiduciary under the Employee Retirement Income Security Act (ERISA) which requires them to act in the best interest of patients, to be prudent with the design and funding of health benefits for workers and families, and not to pay unreasonable fees. However, under current law, PBMs have no obligation to show their customers—the employers—how their money is spent. Therefore, PBMs can focus on maximizing profits, even if that means suboptimal formularies, unnecessarily expensive drugs for patients, less value for employers, more frustration for clinical teams and pharmacy benefits that are not designed in the best interest of the patients.
GTMRx will work to extend ERISA fiduciary responsibility and transparency requirements to PBMs. By requiring transparency for PBMs, GTMRx can help employers see what they are—and what they are not—getting from their service providers. As a consequence, the current PBM business model will need to change. Instead of making money via drug price arbitrage, transparency will force PBMs to compete for business based on the value-added services they can provide, including their ability to coordinate care and manage patient health with efforts like CMM. All PBMs might not (quickly) move in this direction—but this will create significant opportunities for emerging PBMs seeking to add value with services rather than the old arbitrage model, allowing them to gain market share and in turn putting even more pressure on the major PBMs.
This realignment of the PBM industry to focus on value and patients over profits will serve employers and insurers as well by improving the value they receive for the money spent on pharmacy benefits. It will also improve the environment for providers, incentivize PBMs to include and reimburse clinical pharmacists as part of a care team, reduce the current controversial practices that take place between PBMs and independent pharmacists and encourage providers to practice at the top of their license.
GTMRx will work with stakeholders to support legislation to implement these changes, build support inside and outside of Congress and raise awareness of the issue. With an increasing focus in Washington, D.C. on the PBM industry, now is the time to move forward with a bold agenda that has the potential to be truly transformational.
And GTMRx has already activated on these issues, working with allies in and out of Congress to develop new legislation that would enact these goals of transparency and fiduciary responsibility for PBMs. Legislation has the potential to reform the PBM industry in a number of key ways, including requiring full transparency to employer plan sponsors, requiring that rebates and discounts be passed on to the payer and patients, limiting arbitrage strategies such as so-called “spread pricing,” regulating improper steerage to PBM-owned pharmacies, eliminating PBM profits derived by “clawing back” employer payments from pharmacists, revealing the secret contracts between PBMs and drug manufacturers and defining a PBM as a fiduciary under ERISA. GTMRx is working on this legislation with both Republicans and Democrats, in both the House and Senate, with the hopes of passing it into law imminently.
GTMRx is also supporting policymakers in gathering authoritative information about PBM practices, with involvement in efforts at the Federal Trade Commission, studies by the Congressional Research Service, reports by the Government Accountability Office and more. When complete, the findings from these efforts will provide momentum for Congress to advance legislation to reform the PBM industry.
At the same time, GTMRx is reaching out to a diverse set of stakeholders to invite them to work together on these legislative efforts. Outreach is ongoing to groups representing providers (including doctors and pharmacists), patients and consumers, employers, service providers to group health plans and influential think tanks and foundations.
The culmination of these efforts will be a successful change in US law to correct problems related to pharmacy benefits, creating new supply and demand incentives to encourage and facilitate CMM. And GTMRx is on the front lines, moving the process forward in a rapid manner.

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