Pharmacy Benefit Managers Are Key to Helping Retirees
Published in Morning Consult
With the United States in a debate on high drug prices, solutions are being sought that will lower the cost to consumers and taxpayers, while increasing access. However, care must be taken at the federal level to not make changes in the name of relief that results in consumers such as retired teachers paying more.
The Teachers’ Retirement System of the State of Kentucky is responsible for providing sustainable, high-quality health care for Kentucky’s retired teachers, and doing so gets more difficult every year. The cost of health care continues to climb, forcing purchasers such as TRS to make hard choices about benefits and the costs that retired teachers are asked to pay — especially those for prescription drugs. We strive to keep costs low for our teachers, who — after decades of educating America’s students — should be entitled to a secure retirement where they do not have to struggle to afford their prescriptions.
To help provide quality drug benefits to retired teachers, TRS relies on a pharmacy benefit manager, which brings the purchasing power of patients together to help negotiate lower drug prices with drug companies. TRS has 36,000 lives under its Medicare Eligible Health Plan, but the leverage of PBMs gives retired teachers the power of millions of covered lives to get discounted prices that TRS acting alone could not negotiate. Based on our experience offering Medicare Part D benefits, the use of a PBM has been positive.
In the federal debate surrounding high drug prices, PBMs are sometimes blamed, and suggestions from across the nation have been made to get rid of PBMs altogether. But few people understand the role and value of PBMs in the prescription drug supply chain or what a world without PBMs would look like. As the person regularly responsible for running the numbers for Kentucky retired teachers’ Medicare drug plan, the results would be striking.
According to our internal estimates, if PBMs simply vanished tomorrow, drug prices would double immediately for Kentucky’s Medicare-eligible retired teachers because of the loss of upfront discounts driven by the PBM. This does not include the additional $23 million in savings from other PBM-offered safety and utilization programs.
Nor does it include the benefit of our PBM maintaining a national network of 60,000-plus retail pharmacies or operating a formulary that complies with all of Medicare’s myriad requirements. Our retirement system is not equipped to do this work alone.
Eliminating PBMs would cost TRS $280 million per year, according to our estimates, and do nothing to address the high list prices set by drug manufacturers. My work includes being responsible for ensuring that TRS provides affordable care for Kentucky’s teachers in retirement, and I must make sure it is understood that our retirement system could not achieve these $280 million in savings a year without the help of our PBM.
Health care purchasers need solutions to drive down the prices set by drug companies, as well as solutions that preserve and build on the tools already working to help keep costs to our members in check. Retired teachers are depending on it.
Jane Gilbert is the director of retiree health care for the Teachers’ Retirement System of the State of Kentucky, a member of CAPD.