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Testimony of Before the Public Forum on Limiting
Individuals to Mail-Order Pharmacy Benefit Managers Sponsored by May 18, 2006
I am Liz Krueger and I am the
State Senator for Pharmacy Benefits Managers
(PBMs) are a relatively new player in the increasingly complex world of
health care. As prescription medications become an ever more costly component
of health care, health insurance plans, employers and unions have embraced
formularies and new procurement methods for prescription drugs for enrollees. PBMs have been touted as the
cost-saving middle-man between insurance providers and the enrollee for
prescription drugs. The promises of savings were based on the PBM having bulk
purchasing advantages and the acceptance by insurers of savings if limits
were placed on enrollees choices of drugs. It was assumed that through the
combined use of formularies, financial incentives for using generic drugs and
the economic disincentives to use non-preferred brand name medications there
would be savings for all. It was also
hoped that the increase in competition between PBMs to contract with health
care insurers would result in lower prescription drugs costs. The theory was
that savings would benefit the PBM, the insurer and ultimately the enrollee. Unfortunately, this optimistic
vision has not turned out to match the current reality. What has become
apparent is that PBMs have interlocking financial agreements with
pharmaceutical companies that encourage inflated pricing and monetary
"give backs" to the PBMs.
From the beginning there have been concerns that the operating agenda
used by PBMs are anything but transparent, and it has now become clear
that many decisions that are made in the drug selection process relate to the
potential for profits for the PBMs -- rather than the drug's efficacy or
actual cost to consumers.
Financial arrangements between PBMs and mail order prescription drug
companies strongly suggest that a conflict of interest exist for PBMs; the
motivation to satisfy corporate interests rather than consumer needs is a
deeply troubling concern. According
to research done by the Consumers Union; in the New York State Attorney General
Eliot Spitzer and State Civil Service Commissioner Daniel E. Wall announced
on August 4, 2004 a lawsuit against Express Scripts, Inc. (provides
PBM services) for conducting
elaborate schemes that inflated by millions of dollars the cost of
prescription drugs to the Empire Plan, New York State's largest employee
health plan. The lawsuit is a result of a one-year investigation by the
Attorney General's office in cooperation with the Department of Civil Service
and the Office of the State Comptroller (OSC) and is the result of audits of
Express Scripts conducted by OSC in 2002. The lawsuit alleges that Express
Scripts inflated the costs of generic drugs and lined its own pockets with
millions of dollars in manufacturers rebates that should have gone to the Empire
Plan. Additionally, Express Scripts is charged with fraud and deception in
inducing physicians to switch a patient's prescription in order that Express
Scripts receive money from the second drug's manufacturer. It was further
asserted that Express Scripts would switch members from a brand drug losing
patent protection to another made by the same manufacturer that was not
facing generic competition. These prescription changes resulted in higher
drugs costs for plans and members and increased the bottom line for Express
Scripts. We cannot overlook the possibility that individuals have also experienced adverse effects from
changes in established medical protocols. As we look at a new trend in
covered pharmacy benefits, i.e., limiting an individual with drug coverage to
a mail-order-only-system for securing maintenance medication I am extremely
alarmed. We know that PBMs have ownership in the larger mail-order
prescription drug companies. With the PBMs history of self-serving, behind
the scene deal making, I am skeptical that consumers will be the financial
beneficiary of such practice. Every PBM in the country is facing litigation
in multiple forums by State Attorney Generals, unions and consumer groups.
Why would we want to put the fox in-charge of the hen house? Being that mail-order pharmacy
companies often have interconnecting fiscal relationships with PMBs, a
mail-order-only method for procuring maintenance medication is to be avoided.
There are additional reasons for not favoring the exclusive by mail formula.
I support the capability of a person to make choices that fit their needs and
that are still fiscally sound. I want to ensure that New Yorkers have the
choice to mail-order OR go to their local pharmacy. There are times
when a face-to-face exchange works best. Relationships between doctors, local
pharmacies and patients allow for the enrollee to receive information about
side-effects and dosage as well as the chance for the pharmacist to recognize
possible contraindicated drug interactions and allergies. It has also been
noted by the Pharmacists Society of the State of What we need is clear consumer
protection and fair pricing for New Yorkers. The Medicare Part D Prescription
Drug Benefit exemplifies the dangers that are present when we entrust our
health care to a market place that is driven purely by the need to satisfy
corporate shareholders. We need choice, accountability, control and
oversight. I have introduced legislation in the Senate (S.2249) that would
alert consumers to the existence of a PBM and of any conflicts of interest
that exist between the owner of the PBM and the drugs offered in the
formulary. My legislation would force disclosure of whether the PBM is
controlled in whole or in part by a company that manufacturers, distributes
or sells retail or wholesale prescription drugs. It would also allow
enrollees and prospective enrollees the ability to review formularies and
thus learn about the inclusion of preferred and brand name medications.
Consumers will be able to trace through the listing of drugs in the formulary
the relationships that might exist that have a benefit for the PMB. Such
transparency will create an environment that makes it more uncomfortable for
the PMB to continue their self serving practices. We must make the work that
PBMs do more transparent and serve the best interests of the consumer. Senator Klein,
thank you for the opportunity to submit testimony. I look forward to
continuing to work with you and our colleagues in |
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