While Congress still has yet to pass any monumental drug reform, states are continuing to introduce legislation aimed at regulating pharmacy benefit managers (PBMs) with hopes of moving the needle on drug pricing. Since the Trump Administration’s drug pricing blueprint was published nearly two years ago, there has been increasing attention on the role of PBMs in the drug supply chain and their impact on drug prices.
According to the National Law Review, 14 states enacted legislation last year to regulate PBMs and implement a licensing and/or registration requirement. While one can form their own opinion on how PBMs should be regulated, URAC does not formally have a position on what constitutes appropriate oversight. We do, however, take a very strong position against any regulatory effort that seeks to prohibit PBMs from using accreditation for network contracting purposes. For background, the majority of state PBM regulation bills include language that prohibits their ability to implement any accreditation requirement that is more stringent than the associated state Board of Pharmacy requirement(s).
So, how exactly did we get here?
As mentioned earlier, PBMs have taken the brunt of criticism as it relates to drug pricing. Part of the issue is the misaligned incentives built into the system in that PBMs help negotiate lower prices on behalf of health plans, but they also are paid rebates from drug manufacturers. Most PBM regulatory efforts have centered around increased transparency as it relates to rebates, passing rebates directly to patients and payers, and prohibiting the use of spread pricing. I will note that a recent Government Accountability Office (GAO) report showed that the majority of rebates were actually passed through to plans in 2016 under Medicare Part D debunking the myth that PBMs retain these funds for themselves.
As an aside, URAC generally does not comment on PBM’s use of rebates but this has been such a focus of scrutiny I would be remiss if I omitted the subject altogether.
Now, going back to how accreditation fits into all of this, many states have sought to prohibit the use of accreditation in concert with PBM regulatory efforts. This is in part due to outcries from small, independent community pharmacist groups about the burden of accreditation.
Obtaining accreditation is a rigorous process, but URAC firmly believes that it is an essential quality tool to protect patients from receiving subpar care. At its core, obtaining Specialty Pharmacy Accreditation is an independent, third-party validation of a pharmacy’s ability to deliver quality services and care management to patients. And, in response to concerns about the cost of accreditation being a barrier, we recently launched a special discounted price offering for small specialty pharmacies.
Nonetheless, I personally don’t think requiring accreditation is really the issue here, but more so the manner in which it is sometimes used by PBMs in their contract requirements. Some pharmacies have alleged to policymakers that accreditation is being used to “box out” otherwise willing pharmacies from participating in PBM networks. As such, many state bills have simply proposed removing a PBM’s use of accreditation altogether to remedy this issue. But, URAC believes there are other alternatives. One of which could be to require PBM’s to publicize their accreditation requirements upon request from a pharmacy and/or limit their ability to change accreditation requirements within a certain time frame. These approaches were recently adopted in an amendment to Wisconsin AB 114 and you can read URAC’s comments to the original bill by clicking here.
As we continue to engage policymakers on this important issue, I hope that other states start to recognize that a blanket prohibition on accreditation will not serve them any good and to really consider what their true goal is when it comes to regulating PBMs.
For those that are interested, the National Community Pharmacists Association maintains a map on their website looking at PBM reform efforts across the country.
To learn more about the importance of considering quality in the fight against high drug costs, click here.