Group of Transparent Pharmacy Benefit Managers Form Transparency-Rx to Advocate for Clarity and Reform in Pricing of Prescription Drugs
Coalition is pushing for action among 43 pharmaceutical pricing bills currently before Congress
Increased transparency that lets consumers see prices charged by hospitals, physicians, and clinical laboratories in advance of service is an important goal of healthcare policymakers and self-insured employers. But greater transparency has yet to affect how prescription drugs are first priced, marked up, and charged to the final purchasers.
Now a group within the pharmaceutical industry has issued a call for greater transparency in the pricing of prescription drugs. A number of smaller Pharmacy Benefit Managers (PBMs) have formed a coalition against the often confusing and overly complex pricing of prescription drugs in hopes that their efforts will give healthcare consumers more clarity when it comes to comparison shopping for pharmaceuticals.
Calling itself Transparency-Rx, the newly-formed coalition “will push for changes to the PBM model … [such as] a ban on spread pricing as well as reforms to the rebate model that include the impact of group purchasing organizations,” Fierce Healthcare reported.
Traditional PBMs act as a third-party to connect pharmacies and drug companies with healthcare payers. This new alliance of “Transparent” PBMs claims that traditional PBMs need to be reformed, and that is what Transparency-Rx is advocating.
According to a press release, Transparency-Rx is working with both political parties in Congress and the current administration to bring “critical reforms to a costly and misaligned drug pricing market.”
The group is seeking:
- A 100% pass-through model.
- A ban on spread pricing.
- National reporting and disclosure requirements for the industry and its consultants.
- Delinking provisions that will require PBMs to be paid by a flat, disclosed fee.
- Rebate reform, inclusive of “group purchasing organizations” (GPOs).
- Technology that empowers actionable data and information to be shared with patients, plans, pharmacists, and physicians, throughout the drug supply-chain.
“In an industry that has opposed meaningful drug reform, Transparency-Rx seeks to inject common-sense, change, and clarity into a complex environment,” the coalition stated in its press release.
This is consistent with the wider goal of healthcare policymakers to achieve fully-transparent prices for all healthcare services so that buyers—self-insured employers, patients, and others—can easily compare prices of prescription drugs.
“The notion that transparency is a dangerous idea, to us is sort of a little absurd—it’s already working,” Transparency-Rx founder, President, and Managing Director Joseph Shields, JD, (above) told Fierce Healthcare. “The question is, can Congress help empower it and take it to scale for a variety of different plans?” (Photo copyright: Transparency-Rx.)
In a press release announcing S.4293—the Pharmacy Benefit Manager Transparency Act of 2022—Senator Chuck Grassley stated, “Today, three PBMs control nearly 80% of the prescription drug market. They serve as middlemen, managing every aspect of the prescription drug benefits process for health insurance companies, self-insured employers, unions, and government programs. They operate out of the view of regulators and consumers—setting prescription costs, deciding what drugs are covered by insurance plans and how they are dispensed—pocketing unknown sums that might otherwise be passed along as savings to consumers and undercutting local independent pharmacies. This lack of transparency makes it impossible to fully understand if and how PBMs might be manipulating the prescription drug market to increase profits and drive-up drug costs for consumers.”
The act was reintroduced as S.127 to the next Congress in 2023.
According to PharmaNewsIntelligence, “Vertical integration within the market has resulted in most PBMs being owned by the largest insurers in the country. The ACMA [Accreditation Council for Medical Affairs] estimates that CVS Caremark, Express Scripts, and OptumRx control approximately 89% of the market share.”
Transparency-Rx represents more than 14 million people in all 50 states, the press release notes. Founding transparent PBM members include:
- MedOne Pharmacy Benefit Solutions Rx,
- Navitus Health Solutions,
- RxPreferred Benefits, and
“The founding members are companies that are looking to have a voice in the drug pricing debates and reform efforts,” Joseph Shields, JD, founder, President, and Managing Director of Transparency-Rx, told Fierce Healthcare.
Transparency-Rx’s efforts will “likely ruffle feathers at the industry’s biggest companies,” Fierce Healthcare surmised.
“As a counterweight to the status-quo, Transparency-Rx confronts stale and dated ideas, takes on corporate monopolies, and especially big PBMs and the insurance lobby,” Transparency-Rx states on its website. “For too long, these special interests have been the lone and loudest voice fighting against real policy changes on drug pricing and health care, protecting a broken system which hides profits and inflates prescription costs, harming the interests of diverse communities, working families, and seniors.”
Transparent PBMs Focus on Congress
“Congress should know patients, employers, and plans can thrive in a transparent, competitive, and efficient PBM market,” LeAnn Boyd, PharmD, CEO and founding partner at Liviniti, told Fierce Healthcare. “We embrace critical reforms to a costly and misaligned drug pricing market. In fact, most of these reforms are already reflected in the business and innovations of transparent PBMs.”
Clinical laboratory managers and pathologists may be surprised to learn that 43 bills are currently pending in Congress. Each of these bills focuses on changing the prescription pricing policy for both public and commercial healthcare sectors. The number of pending bills on this topic signals that many in Congress consider the long-standing and complex pricing structure of prescription drugs to be a major issue that needs a solution.
“The coalition is working with lawmakers on both sides of the aisle as well as with the Biden administration, according to the announcement,” Fierce Healthcare reported.
“Just as transparency offers a better way to managing prescription drug benefits, Transparency-Rx represents a step forward to sound policy solutions, galvanizing true affordable prices,” Transparency-Rx claims.
“We’re not naive in terms of where we are in the conversation. We’re looking to scale up and play a meaningful role,” Shields told Fierce Healthcare.
Transparency-Rx’s progress is worth following because it’s a group of smaller PBMs forming a coalition to advocate for more transparency in the prices of prescription drugs. Currently, it’s nearly impossible to understand the way drugs are priced and how rebates are passed along the reimbursement chain. That complexity is what is causing transparent PBMs to organize.
How big is this problem? For 2022, prescription drug spending was $405.5 billion, according to government data. That is about four times the amount spent annually in the United States for clinical laboratory and anatomic pathology testing.
—Kristin Althea O’Connor