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Manufacturers are committed to offering their workers health insurance, but the unscrupulous business practices of pharmacy benefit managers have contributed to rising health care costs, which make it all the more difficult for manufacturers to afford to offer this benefit, the NAM told the Department of Labor recently.

What’s going on: PBMs, the underregulated middlemen that design, negotiate and administer prescription drug benefits on behalf of health plans and employers, contribute to the skyrocketing cost of health care by pocketing manufacturer rebates, tying patient cost-sharing to list prices, using spread pricing structures and obfuscating their questionable business models.

• In January, the DOL proposed a rule to require PBMs and their subsidiaries to disclose much-needed information to self-insured health plans, which would enable manufacturers with such health plans to make more informed decisions about their PBM contracts.
• Currently, health plans have insufficient information about the PBMs with which they contract and thus are unable to determine the reasonableness of PBMs’ compensation and activity.

What the DOL should do: In its letter, the NAM applauded “the DOL for taking steps to address the affordability of health care by proposing this rule” and offered recommendations to strengthen the rule. The recommendations include:

• Disclosure of additional forms of PBM compensation and revenue;
• More granular breakdowns of PBMs’ remunerations from pharmaceutical companies;
• Disclosure of negative impacts due to formulary placement incentives;
• Application of the rule to fully insured group health plans, in addition to the self-funded health plans already covered; and
• Aggregate data provided to the DOL by PBMs to better enforce the rule.

Why it’s important: “Seventy percent of manufacturers cited health care and insurance costs as their primary business concern in the NAM’s most recent Manufacturers’ Outlook Survey , [and] increased costs are disproportionately impacting small and midsize manufacturers” the NAM stated in its comment letter to the DOL. Robust PBM reform will help lower costs for manufacturers and their workers.

• That is why PBM reform has long been a top policy priority for the NAM.
• Manufacturers applaud this rule and encourage the DOL “to work expeditiously to finalize the proposed rule” including our recommendations, “which will institute further PBM transparency for plan sponsors and for the DOL so the agency can monitor PBM activities, including the detrimental impact of PBM self-pricing arrangements and conflicts of interest.”

The final say: “Reforming PBMs’ negative impact on employers that offer health care benefits to their employees is a crucial piece of lowering health care costs for manufacturers”… and “the NAM looks forward to working with the DOL to finalize and implement this important rule,” said NAM Director of Health Care Policy Jess Wysocky and NAM Vice President of Domestic Policy Jake Kuhns.