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NACDS aims to set record straight regarding PBM testimony at Senate hearing


ALEXANDRIA, Va. — The National Association of Chain Drug Stores on Wednesday challenged some of Express Scripts' and Medco's testimony during last week's hearing before the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, most notably that PBMs are subject to state regulation in all states and that as a PBM the two companies have no influence on the design of prescription drug benefits.

In comments submitted to subcommittee chair Sen. Herb Kohl, D-Wis., NACDS president and CEO Steve Anderson emphasized ways in which the PBM executives attempted to downplay the potentially harmful impact of the proposed merger.

“We believe that these witnesses obfuscated facts in an effort to portray their companies in a better light, downplaying many of their companies’ objectionable activities that would certainly worsen if the two companies were allowed to merge,” he noted.

According to the retail pharmacy association, PBMs have successfully opposed overall efforts at state regulation, leaving only a "couple of states" and "the regulation in those states is weak, at best."

As to assertions made by Express Scripts CEO George Paz and Medco CEO David Snow on their lack of control over the design of prescription drug benefits, Anderson countered, "PBMs design the benefit plans and determine the costs. Because of that, it is our view PBMs steer the health plans and employers toward the items they most want to sell," such as mail order or pharmaceutical brands with large rebates.

Express Scripts and Medco executives also made the case that the number of retail pharmacies continues to rise. "Actually, the number of pharmacies is shrinking relative to the number of prescriptions filled by retail pharmacies," Anderson noted. "In 2000, there were about 19 pharmacies for every one million prescriptions, but by 2010, there were only about 16 pharmacies per one million prescriptions."

And Anderson questioned several other areas of concern based on Paz’s and Snow’s comments, including the level of savings that PBMs actually achieve and transparency regarding rebates and discounts from manufacturers. This point has taken on tremendous significance amid the controversy surrounding the merger, as consumer groups and elected officials alike have voiced concern and skepticism that a new mega-PBM would pass along any purported savings to consumers, employers and health plans.

“If this merger is allowed to proceed, patients will be faced with reduced access to retail pharmacies and pharmacy services as the combined entity shifts patients to mail order and dominates specialty pharmacy,” Anderson reiterated. “We believe that you should consider the testimony of Mr. Paz and Mr. Snow as illustrative of how their respective companies presently conduct themselves, which would only be exacerbated by a merger.”

A copy of the NACDS comments for the record can be found here.

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