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PBMs form Transparency-Rx to push for drug pricing reform

Modern Healthcare
September 20, 2023
By MARI DEVEREAUX 

 

A group of six pharmacy benefit manager companies have established the lobbying coalition Transparency-Rx to advocate for industry reforms targeting prescription drug costs.

The nonprofit, which launched Tuesday, aims to advance legislation that would force PBMs to pass along drugmaker rebates to health insurance carriers, disclose their cost negotiations with pharmaceutical companies and end spread pricing, among other practices.

Transparency-Rx was created to be a singular, organized voice addressing national concerns about medication prices and educating legislators and stakeholders on alternative solutions, said Jake Frenz, co-founder and CEO of SmithRx, and a founding member of the coalition.

“Disclosing prices and being transparent, that’s a good pathway forward that leads to a more competitive marketplace that has been proven from the SmithRx model and other partners in the coalition to drive down drug costs,” Frenz said.

One notable founding member of Transparency-Rx is Navitus Health Solutions, owned by St. Louis-based SSM Health and Costco Wholesale Corp.

Compared with PBMs that typically charge managed care organizations more for drugs than what they originally paid, “transparent PBMs” like Navitus and SmithRx gain revenue from a set administrative fee, without charging clients extra for medications.

Other founding members include AffirmedRx, Liviniti, MedOne Pharmacy Benefit Solutions and RxPreferred Benefits.

Absent from the Transparency-Rx coalition are larger PBMs like CVS Caremark, Express Scripts, OptumRx and Humana Pharmacy Solutions, which collectively control more than 80% of the market.

“There are about 60 to 70 PBMs out there, but only six really have any material market share,” said Antonio Ciaccia, president of 3 Axis Advisors, a drug pricing and supply chain consultancy. “As a result, it’s not surprising to see small PBMs gather together under a similar philosophical umbrella on the outskirts of the marketplace.”

Because of the lack of competition in the PBM space, Ciaccia said it’s a welcomed change of pace to see Navitus and other smaller companies trying to act as disruptors and show alternatives exist to the mainstream drug pricing practices.

“Large PBMs prefer to keep things the way they are, not just within policy, but within the actual purchasers marketplace,” he said. “There are other PBMs out there that have different missions, incentives and ethics that represent a much needed check on how the current system is operating today.”

Following years of consolidation and vertical integration, as well as Congress’ enactment of the 2022 Inflation Reduction Act, the PBM market faces heightened scrutiny from federal policymakers.

Within the past few months, congressional committees have advanced a number of bills intended to increase PBM oversight, improve price transparency for prescription drug pricing and medical services and reduce out-of-pocket spending.

Transparency-Rx represents more than 14.5 million patients under health plans in all 50 states, with goals to expand its PBM membership in the near future, said Joseph Shields, managing director of the coalition.

The coalition is also pushing for rebate reform that includes group purchasing organizations in the conversation and more data sharing between PBMs and patients, plans, pharmacists and physicians.

 

Read More at Modern Healthcare.