Drug Price Reporting Rules Foiled by Supply Chain Loopholes
- Overseas companies tied to drug industry don’t send data
- Entities with health system don’t know what others are paying
U.S. transparency rules for drug and health costs are being stymied by interlocking business deals between insurers, pharmacy liaisons, and other companies, including some that are overseas.
Those are observations gleaned from industry comments about a multi-agency rule (RIN 0938 AU66) designed to give employers and insurers a window into how the care they’re paying for is priced. Entities at every stage of the supply chain say they need more information on what the other companies in the system are paying.
Getting that information may be difficult. The Federal Trade Commission deadlocked 2-2 Thursday on a proposal to study on pharmacy benefit managers (PBMs), the entities that manage prescription drug coverage for insurers. The FTC Democrats proposed to look at the competitive impact of PBM practices that might disadvantage independent or specialty pharmacies. The motion failed because it was rejected by the two Republican commissioners.
The reporting requirements from the transparency rules went into effect in December, and regulators are seeking input into how to clarify them. The government will issue biennial public reports on prescription drug pricing trends and their impact on premiums and out-of-pocket costs starting in 2023.
One problem is that some companies in the chain don’t give up their data because they’re overseas and can avoid U.S. regulatory scrutiny. PBMs often do business with group purchasing organizations to control costs, and those organizations often operate outside the U.S.
To complicate matters further, the largest PBMs are owned by large health insurers, Shawn Gremminger, director of health policy at the Purchaser Business Group on Health, said. The group suggested that the Department of Health and Human Services extend drug price transparency requirements to organizations outside of the U.S., in a comment letter on the rule.
The PBGH is a nonprofit coalition of nearly 40 public and private organizations that spend nearly $100 billion a year to cover about 12 million employees and family members. In 2021, it started its own pharmacy benefit manager, EmsanaRx, to serve employers.
Employers are concerned that drug costs are inflated through “inside dealing” as affiliated entities mark up prices through a chain of interactions and then sell them to employer plans, Gremminger said. Employers want to know the prices at each stage of the process, he said. Large group plans want more transparency about how much PBMs pay for drugs compared to what they charge employers.