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CAPD Statement for the Record: Senate Committee on Finance

The Coalition for Affordable Prescription Drugs (CAPD) appreciates the opportunity to submit the following statement for the record for the Senate Committee on Finance Hearing, “Drug Pricing in America: A Prescription for Change, Part III.”

The Role of PBMs in the Health Care System

In the face of rising drug prices, pharmacy benefit managers (PBMs) partner with employers, unions, public sector retirees, government programs and other organizations who purchase health care to help manage prescription drug coverage for millions of Americans. By negotiating with drug companies and providing tools to improve care and help lower out-of-pocket costs, PBMs save payers and patients 40 – 50 percent on their prescription drug costs – or an average of $941 per person – each year.

More than 181 million Americans have employer-sponsored health insurance, and employers pay on average $1,300 per person annually on prescription drugs alone. In this environment, a PBM partnership is critical to being able to manage these costs and offer sustainable, affordable prescription drug coverage.

In addition to the commercial marketplace, PBMs play an important role in driving savings for government programs and taxpayers. PBMs are estimated to save Medicare Part D $896 billion and state Medicaid plans $47.6 billion over a decade – helping keep premiums stable and state budgets predictable.

The Value of a PBM Partnership

With more than 4 billion prescriptions filled each year in the U.S., PBMs are critical to helping employers and other purchasers navigate this complex system and ensure patients are delivered the most effective, affordable drugs. Key roles played by PBMs include:

Helping Manage Overall Health Care Costs

PBMs design personalized drug benefit programs to help each employer provide coverage that is suited for their employees’ needs. PBMs drive savings to lower premiums and out-of-pocket costs, so employees can get the prescriptions they need to get and stay healthy.

Negotiating with Drug Manufacturers

PBMs make prescription drugs more accessible and affordable by leveraging their purchasing power to negotiate deep discounts from drug companies. These discounts can reduce out-of-pocket costs and help keep premiums stable.

Driving Generic Utilization

PBMs use a variety of tools to drive generic utilization, including providing information to the patient or physician when there is an equally effective generic drug, often at a lower price, available. PBM efforts on greater generic use is estimated to reduce drug spending by up to 19 percent each year.

Lowering Out-of-Pocket Costs for Patients

PBMs ensure patients and their doctors have visibility into drug prices based on the individual’s specific drug benefit at the time of their visit. This enables informed decision-making by the provider and patient and this tool has been shown to save patients $80 on average per prescription.

Increasingly, plans are also offering programs that allow discounts negotiated from drug makers to be passed on to patients at the pharmacy counter. These programs are growing in popularity, and currently provide savings for nearly 20 million patients.

Ensuring Patient Safety

PBMs help prevent 100 million medication errors each year by checking for potentially dangerous drug interactions and sharing this information with doctors, pharmacists and patients.

Increasing Patient Access

PBMs build national networks of pharmacies to provide employees convenient access to fill their prescriptions at a pharmacy near them or through a mail-order option. PBMs work directly with their networks of pharmacies to ensure the highest clinical standards and the lowest costs.

Helping Manage Chronic Conditions & Increase Adherence

Research has shown that between $100 and $300 billion in avoidable health care costs have been attributed to nonadherence to prescription drugs in the US annually, representing 3 percent to 10 percent of total US health care costs. PBMs help to improve drug therapy and adherence. For example, for diabetes patients they are helping to prevent some 480,000 heart failures and 230,000 incidents of kidney disease each year.

The real problem: high and rising drug prices

While PBMs help to shelter consumers from rising drug costs, the prices are set and raised exclusively by drug manufacturers. As Congress and the Administration consider policies to help ease patient costs, they should first look to address the root of the issue: the high and rising prices set by drug companies, and their abuse of the patent and regulatory systems that enable them to artificially set – and raise – prices. We hope that Congress will focus on solutions that tackle the root of high drug prices in order to achieve long term solutions and lower costs for patients.

Policy Solutions

CAPD encourages Congress to implement practical policies that empower patients and ease their out-of-pocket burden as well as put an end to system abuses that keep prices artificially high. Doing so will support a competitive marketplace that increases access and affordability for patients – and supports lowering costs across the entire healthcare system.

With a focus on patient affordability, CAPD supports policy changes that would allow patients to have zero-dollar copays on medicines that treat chronic conditions prior to meeting their deductible, as well as expanding access to patient-specific cost information to consumers and providers at the time of prescribing. We encourage the greater use of value-based payments and policies that increase generic utilization. Lastly, CAPD urges policymakers to put an end to brand drug makers’ gamesmanship that distorts the market and contributes to higher prices. To this end, we support the prompt assertion of patents, allowing biosimilar manufacturers to begin resolving patent issues prior to approval, and preventing restricted access programs from delaying timely generic competition.

CAPD once again thanks the Committee for holding this important hearing, and for the opportunity to comment today. We are committed to working with Congress and other stakeholders to find solutions that will meaningfully lower prescription drug prices for all Americans.

About CAPD

CAPD is a diverse group of employers, unions, public sector employees and retirees and the pharmacy benefit managers (PBMs) they partner with to provide more affordable prescription drug coverage for millions of Americans.