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DealingwithPBMs:
CanIhaveanaspirin?
DAVIDBALTO
LawOfficesofDavidA.Balto David.Balto@dcantitrustlaw.com 2027895424
RoleofPBM:TheHonestBroker?
PBMsareintendedtoserveashonestbrokersbetween drugmanufacturersandplans
Handlepharmaceuticalclaimsforhealthplans Seeklowestcostfrommanufacturersandreimbursementfrom pharmacies Setuppharmacynetworks Admin. Services, ,
Discounts/Rebates Plans
PBM
Rebates/fees Pharms Payment for drugs Payments for mail-order drugs Drug Mfr
COMPETITIONLESSON1
3ElementsNecessary:
Choice Transparency LackofConflictof Interest
7/21/2011
PBMIndustry
TheBigThreecontrolover80%nationalPBM market. Profitsclimbnearlythreefoldfrom2003to2010, fromover$900milliontoover$3.6billion
PBMPharmacyRelationship
Retail pharmacies are generally offered a take it or leave it deal to be included in the network, with only the largest pharmacy chains having any ability to negotiate with the PBMs."
Allison Dabbs Garrett & Robert Garis, Leveling the Playing Field in the Pharmacy Benefit Management Industry.
PBM
Pharmacy 5
TheReimbursementProblem
PBMsmakemoneyplayingthespread
Pocketingsavingsachievedonbehalfofplan
NewAreaforPBMprofits:340bRebates
Whose Wh rebate b is i it? i?
340b
7/21/2011
PotentialResponses
Informationsharing Collectivenegotiations Publicawareness Advocacy
PastPBMEnforcementActions
Multistateenforcementactionsresultinginover$371.9 millionindamages:
UnitedStatesv.Merck&Co.,Inc.,et.al $184.1millionin damagesforgovernmentfraud,secretrebates,drugswitching, andfailuretomeetstatequalityofcarestandards. UnitedStatesv.AdvancePCS(nowpartofCVS/Caremark) $137.5millionindamagesforkickbacks,submissionoffalse claims,andotherrebateissues. UnitedStatesv.Caremark,Inc. pendingsuitalleging submissionofreversefalseclaimstogovernmentfunded programs. StateAttorneysGeneralv.Caremark,Inc. $41millionin damagesfordeceptivetradepractices,drugswitching,and repacking. StateAttorneysGeneralv.ExpressScripts $9.5millionfor drugswitchingandillegallyretainingrebatesandspread 8 profitsanddiscountsfromplans.
PBMREFORM
States:Reformlegislationproposedinover 20states Focus:Transparencyandfiduciaryduty EnactedinD.C.,Iowa,SouthDakota, Maryland,Vermont,Arkansas PatientProtectionandAffordableCareAct DepartmentofLaborRegs
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7/21/2011
PPACAHealthReform: PBMTransparency
Appliestoplansinthestateoperatedexchanges (privateandFEHBPadministeredplans)andPart Dplans PBMstoreporttotheSecretaryandcontracting planson:
Retailvsmail;genericdispensingrates; Aggregatemanufacturerrebatesearnedandpassed throughtotheplan AggregatepaymentsfromplanstoPBMsand subsequentpaymentstopharmacies
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PendingPBMLegislation
HR1971/S1058:PharmacyCompetitionandConsumerChoice Act IntroducedintheHousebyMcMorrisRogersandWeinerand intheSenatebyPryorandMoran AnyWillingProvider,protectingpatientchoice Protectingprivacy:datacouldnotbetradedasacommodity byPBMswithoutthehealthplanbeingnotifiedfirst.Plus, patientswouldnolongerreceivesolicitationsfromPBMs unlessthepatientandhealthplanoptedintosuch solicitations. Protectionfromaudits:nolongerthan2years,nomore stringentthanrequiredbylaw,typographicalerrorsnot subjecttorecoupment
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PendingPBMLegislation
HR1839:CommunityPharmacyFairnessAct IntroducedbyWeiner Antitrustexemptionforpharmaciesbutnotapplicableunder specifiedfederalprograms. Entitlesindependentpharmaciesnegotiatingcontractwith healthplanstothesametreatmentundertheantitrustlaws asthetreatmenttowhichbargainingunitsrecognizedunder theNationalLaborRelationsActareentitled. Treatsapharmacyasanemployeeengagedinconcerted activitiesinconnectionwithsuchnegotiations.
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PendingPBMLegislation
HR1946:PreservingOurHometownIndependentPharmacies Actof2011 IntroducedbyMarino Treatsindependentpharmaciesnegotiatingahealthplansthe sameundertheantitrustlawsasanemployeeengagedin concerted t dactivities, ti iti and dnot tasanemployer, l i independent d d t contractor,managerialemployee,orsupervisor,onlyin connectionwithsuchnegotiations. ExemptsactionstakeningoodfaithrelianceonthisActfrom beingsubjecttocriminalsanctionsorcivilpenaltiesbeyond actualdamagesincurred.
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CEQuestion
TrueorFalse?PBMindustryprofitsclimbed nearlythreefoldfrom2003to2010,fromover $900milliontoover$3.6billion.
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CEQuestion
True.
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7/21/2011
Questions?
DavidA.Balto
AttorneyatLaw 1350EyeStreetNW Suite850 Washington,DC20005 (202)7895424 David.Balto@dcantitrustlaw.com
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