Magazine article Drug Topics

More PBMs Agreeing to Pricing Transparency

Magazine article Drug Topics

More PBMs Agreeing to Pricing Transparency

Article excerpt

Notwithstanding early opposition from the nation's pharmacy benefit managers, the HR Policy Associations (HRPA) Pharmaceutical Purchasing Coalition (PPC) now has 13 PBMs agreeing to certification criteria that create pricing transparency.

The PPC includes about 55 employers, with more than five million covered lives. The certification process-named Transparency in Pharmaceutical Purchasing Solutions (TIPPS)-requires PBMs to disclose to their clients the actual acquisition costs for retail and mail-order drugs. The PBMs are required to pass drug company rebates directly to their clients. The PBMs also agree to be audited by the employers. "That, we believe, is the most important criterion," said Marisa Milton, PPC executive director.

"This is a complicated business," said Kristin Begley, Pharm.D., pharmacy practice leader for Hewitt Associates, which wrote the TIPPS standards for the PPC. "PBMs have traditionally had two customers: employers and the [drug] manufacturers. The goal was to align PBM incentives to provide the service they are hired by plans and employers to provide: lower drug costs."

The result is that all TIPPS-credentialed PBMs would charge employers a straight administrative fee instead of making their profits through deals with the drug industry. The certification fee is $50,000. Recertification costs $30,000. "The PBMs pay the fees only if they meet our certification standard," said Milton.

"When we originally reached out to the PBMs three years ago, only three agreed to be certified," said Todd Bisping, manager of pharmacy plan design and administration at Caterpillar Inc., a leading PPC member. "We believe that what's changed is that PBMs talked to their clients as contracts came up for renewal and got some pushback about their pricing policies."

A Medco spokesperson said, "In the first year of TIPPS [2006], Medco felt the requirements were not reflective of the true PBM market and capabilities. In the second year [2007)], HRPA modified and expanded the requirements to reflect marketplace realities."

Aetna Pharmacy Management was one of the three initial PBMs to agree to TIPPS, along with MedImpact Healthcare Systems and Walgreens Health Initiatives. "We were one of the first and we've maintained TIPPS standards ever since," said Ed Pezalla, M. …

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