Tuesday, July 25, 2006


PBM Pricing Transparency

Some good news from today's WSJ (subscription only):

The two PBMs, Medco Health Solutions Inc. and Caremark Rx Inc., each handles the drug benefits for tens of millions of Americans. They have agreed to participate with eight smaller PBMs in a purchasing model that would require them to pass on to clients their own costs for acquiring retail and mail-order prescriptions. They also have agreed to pass along the price rebates, rarely disclosed in the past, that they receive from drug manufacturers.

The more transparent purchasing model is the brainchild of a coalition of 56 large employers, including Caterpillar Inc., International Business Machines Corp., Starbucks Corp. and Ford Motor Co. With more than $4.9 billion in collective pharmaceutical costs last year, they say the complex financial arrangements PBMs have with drug makers make it difficult for them to know if they're getting the best price for their employees' medicines. The idea is to certify PBMs that are willing to follow the group's criteria for transparency, giving employers an alternative that puts pressure on their own PBMs to change.
Pricing transparency is critical to the future of our healthcare system. The system has become bloated with complexity and thousands of "middle men." Getting accurate and timely pricing data in the consumer's hands is a prerequisite to consumerism. Fortunately carriers and providers are finally recognizing that patients and consumers have no idea how much their healthcare costs until after they get their EOB (and I would wager most people don't even look at EOB's). Throw in commissions, bonuses, and fee disclosures on top of that and we'll be getting somewhere.

More and faster please.

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