Dear Colleague,
Late Tuesday, President Trump issued an executive order focused on reducing prescription drug prices. With all the usual caveats—the devil is in the details, actions matter more than words, you know the drill—there are several provisions dealing specifically with PBMs that are very positive.
Section 8, which is titled, "Reevaluating the Role of Middlemen," orders the Assistant to the President for Domestic Policy, the Office of Management and Budget and the Health and Human Services Secretary to provide "recommendations to the president on how best to promote a more competitive, efficient, transparent, and resilient pharmaceutical value chain that delivers lower drug prices for Americans." Now, that language is conspicuously vague. However, when it comes to middlemen, we presume the president is including PBMs as Exhibit A. We have more than a few recommendations, and I'll bet you do too. We will be making them clear to the administration.
And Section 12 orders the Secretary of Labor, pursuant to ERISA, the federal law behind which PBMs have been hiding their schemes for decades, to "improve employer health plan fiduciary transparency into the direct and indirect compensation received by pharmacy benefit managers." Amen! The system for defining, calculating, justifying, and assessing the rebates and fees assessed by PBMs defies understanding by mortal humans—especially since the big three PBMs and their Big Insurance owners have set up GPOs (two of the three offshore) to make it nearly impossible to follow the money trail. We've heard that one of the most common complaints some employers have about their PBMs is that they can't find out exactly how much they are actually paying for prescriptions for their employees. I find that stunning. The customer is asking its vendor for details on how much it is being charged and the vendor gives them the runaround. Talk about the tail wagging the dog.
There's a lot more to the order that we are still unpacking, but those are the provisions that stand out on first reading. As I mentioned before, we're a long way from celebrating. But this is the first time President Trump has been this specific (he's beaten up on the "middlemen" in previous remarks). And it may be the first time any president has focused so explicitly on PBMs in an executive order. It also aligns with our priorities in Congress. In fact, the president's order should be taken as a clear signal to lawmakers to pass PBM reform now.
It's been a busy, good week. In addition to the executive order, 39 state and territory attorneys general sent a letter to Congress urging them to do something about PBMs. Additionally, excellent state legislation was signed by the governors in Alabama and Arkansas. The Arkansas legislation was novel in that it forbids PBMs from operating pharmacies in the state.
From the White House to the states, weeks and years of work yielded progress. There is always more to get done but the tide is turning.
Best,
B. Douglas Hoey, Pharmacist, MBA
NCPA CEO
