Legislators call for transparency in generic drug pricing

While there has been some progress by individual states, greater transparency in generic drug pricing is needed at the federal level, say several U.S. legislators.

U.S. Reps. Doug Collins (R-Ga.) and Dave Loebsack (D-Iowa), the original sponsors of the MAC Transparency Act (H.R. 244), were joined by 14 other members of Congress in a letter to the chairs and ranking members of the U.S. House of Representatives Energy and Commerce, Ways and Means, and Armed Services committees.

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The letter urges passage of the MAC Transparency Act and greater transparency in generic prescription drug reimbursements for federal health programs: Medicare Part D, Federal Health Employees Benefits Program, and the Department of Defense’s TRICARE Program.

“Generic prescription drugs account for approximately 80% of drugs dispensed, but the reimbursement system for these medications is a mystery and it is incumbent upon us to conduct the appropriate oversight of this very large PBM industry to make sure taxpayers are not ‘footing the bill’ for generic prescriptions, simply because the PBMs are not required to update the drastic and unpredictable fluctuations we have seen in the generic drug marketplace,” the legislators wrote in the letter, dated Feb. 22, 2016.

A call for updates every 7 days

The MAC Transparency Act will require PBMs to update the prices of generic drugs at least once every seven days and to inform the health plans and pharmacies how they arrived at the drug prices on their maximum allowable costs (MAC) lists, according to the letter.

This year the Centers for Medicare and Medicaid Services (CMS) began implementing transparency provisions similar to H.R. 244. Furthermore, over the past three years, 26 states have enacted transparency laws with varying provisions and degrees of comprehensiveness, designed to govern PBM pricing of generic drugs, Kevin Schweers, spokesman for the National Community Pharmacists Association (NCPA), told Drug Topics.

Continuing reimbursement problems

However, instead of seeing progress in the MAC pricing issue, the legislators said, they have heard from pharmacists that they are being reimbursed with outdated prices and also that the PBMs are now charging an additional fee after the point of sale, when the contract is being reconciled.

“This fee is called direct and indirect remuneration (DIR), and we believe the PBMs are moving to this fee because they are now being required to update generic fluctuations in a timely manner,” the legislators wrote.

According to Schweers, community pharmacists have had problems with the generic drug reimbursement benchmarks (MACs) for years. "However, in the past few years, it seems to be getting worse, and now is further complicated by a related issue of PBM ‘clawback fees’ or DIRs,” he said.

Consistency needed

NCPA believes that Medicare should increase transparency in this area by “implementing guidance to Part D plan sponsors so that they consistently account for and report these fees,” Schweers said. “In addition, community pharmacists should review their contracts and ensure they know what they contain regarding these fees.”

B. Douglas HoeyPBMs are still often “painfully slow in updating [MAC] prices, even when dramatic price spikes happen virtually overnight,” said NCPA CEO Douglas B. Hoey, RPh. “As a result, community pharmacies are saddled with outdated reimbursements that fail to meet dispensing costs and threaten the viability of their businesses.”

Hoey continued, “H.R. 244 addresses all of these concerns by creating transparency mechanisms in government-run, taxpayer-funded government prescription drug programs.”

He added, "The status quo is untenable, and we hope the Energy and Commerce, Ways and Means, and Armed Services committees will do everything in their power to bring much-needed transparency to government health programs.”

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