GAO Reinforces Positive Impact of PBMs in Part D

Rebates Negotiated on Behalf of Payors May Help Control Premiums
COMMENTARY
August 20, 2019
Executive Vice President, CVS Health and President, CVS Caremark

Pharmacy benefit managers (PBMs) negotiated approximately $18 billion in rebates for Medicare Part D plans in 2016 and passed along 99.6 percent of them to plan sponsors, according to a new report from the Government Accountability Office (GAO).https://www.gao.gov/assets/710/700259.pdf. PBMs manage 74 percent of drug benefit management services for Part D plans, according to the report, and the rebates they negotiate on behalf of plan sponsors may be used to help offset the growth in drug costs and control premiums for beneficiaries.

In fact, over the past three years, average Part D basic premiums have decreased by 13.5 percent, from $34.70 in 2017 to a projected $30 in 2020, saving beneficiaries about $1.9 billion in premium costs over that time, according to the Centers for Medicare & Medicaid Services (CMS).https://www.cms.gov/newsroom/press-releases/trump-administration-drives-down-drug-costs-seniors.

In 2016 PBMs negotiated: $18B
in rebates for Medicare Part D plans
99.6%
of savings passed on to plan sponsors
In 2016 PBMs negotiated: $18B
in rebates for Medicare Part D plans
99.6%
of savings passed on to plan sponsors

The report’s findings — and the CMS data — are further proof of the value PBMs bring to payors and their plan members. Our goal as a PBM is simple: to reduce costs and improve health outcomes. We do this by negotiating discounts with manufacturers, designing formularies that encourage the use of generics and biosimilars, and creating new tools to help bring escalating drug prices under control.

We do this for all CVS Caremark clients — whether it be a Medicare or commercial plan. Last year, we passed along more than 98 percent of the rebates we negotiated to commercial clients. The report, once again, busts the myth that is too often perpetuated by manufacturers that rebates cause higher drug prices, and underscores that there is no correlation between rebates and drug prices.

As a PBM, we create value for the employers, health plans and government programs we serve in four key ways:

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We negotiate the lowest cost possible on behalf of our clients and foster competition among drug manufacturers when more than one clinically equivalent drug is available.

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We encourage the use of generics and lower-cost biosimilars because they are proven to improve adherence and outcomes, while also lowering costs.

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We help reduce drug costs by providing physicians with information that enables them to prescribe the most cost-effective and clinically appropriate medications for their patients.

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To help limit the impact of escalating drug prices, we have developed, and continue to develop, solutions such as our Guaranteed Net Cost pricing model — a new pricing option that provides our clients with a guaranteed price for retail, mail and specialty drug products, regardless of product or price inflation.

Our actions have not only lowered costs for payors, but also helped improve outcomes. Last year, we helped lower out-of-pocket costs for members by 8.4 percent per 30-day prescription while helping improve adherence by up to 1.8 percent for key chronic conditions such as cholesterol, depression and diabetes. We help keep price increases in check, which helps clients keep premiums low for their members and extends access to care. Our focus continues to be on helping payors offer a sustainable benefit by reining in drug costs, while putting people on their path to better health.

Want to learn more about the GAO report and how PBMs help lower costs? Ask Us
COMMENTARY
August 20, 2019
Executive Vice President, CVS Health and President, CVS Caremark

Adherence results may vary based upon a variety of factors such as plan design, demographics and programs adopted by the plan. Client-specific modeling available upon request.

The source for data in this document is CVS Health Enterprise Analytics unless otherwise noted.

Image source: Licensed from Getty Images, 2019.

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