What is the Alliance for Transparent & Affordable Prescriptions (ATAP)?
The Alliance for Transparent & Affordable Prescriptions (ATAP) is a coalition of patient and provider groups functioning at both the state and national level who have joined together to address pharmacy benefit managers (PBMs) and their impact on prescription drug costs and patient access to affordable treatment. Our current membership is made up of the Coalition of State Rheumatology Organizations (CSRO), the Global Healthy Living Foundation, the American College of Rheumatology (ACR), the Florida Society of Rheumatology, the New York State Rheumatology Society, the California Rheumatology Alliance, the North Carolina Rheumatology Society, the Rheumatology Nurses Society, the National Organization of Rheumatology Managers, the Association of Women in Rheumatology, the U.S. Pain Foundation, and the American Association of Clinical Urologists. More organizations are in the process of signing on.
What are PBMs?
Pharmacy benefit managers (PBMs) are companies hired by insurers to manage drug benefit programs. They essentially act as middlemen between insurers, manufacturers, and pharmacies and thus have a uniquely central role in the drug market, handling everything from setting patient copayment amounts to determining which drugs are covered by which health plans.
PBMs use their intermediary position to negotiate discounts from drug manufacturers in exchange for the inclusion of certain drugs on the PBM’s tiered formularies, or its list of preferred drugs. This placement position determines the level of coverage for a drug and therefore patients’ ease of access to it. PBMs purport to pass back a portion of these rebates to the insurers, but due to the opaque nature of their contracts, most of these funds appear to go to their bottom line.
What role do PBMs play in driving up drug costs?
While PBMs were originally set up to control drug utilization and cost, they have since become incredibly effective at negotiating discounts and rebates from manufacturers that they keep for themselves as profits rather than passing those savings onto patients. As a result, patients are paying cost shares that do not reflect the actual lower cost of the drug, which drives up out-of-pocket costs and co-pays. In some cases, PBMs may also push manufacturers to increase their drug’s list price in order to be included on formularies.
Here is an example: A manufacturer originally prices a drug at $100. An insurer hires a PBM to negotiate that price down to $80. The PBM then sells those discounted drugs to pharmacies, which pay a fee to the PBM for negotiating. Since this fee is based on a drug’s list price ($100) instead of the discounted price ($80), the PBM earns an extra profit. Over time, the fees PBMs charge have increased significantly, and these fees have been passed along to patients. PBMs also collect rebate payments from manufacturers, and larger rebates can drive up drug prices and the associated fees. The secretive nature of PBMs makes it difficult to determine the exact percentage of fees based on the original, inflated price.
Why did ATAP form?
As many patients around the country struggle to afford their medications, PBMs continue to reap benefits from the low prices they negotiate from drug manufacturers without necessarily passing savings onto consumers. ATAP was formed to create more transparency around PBM practices that contribute to rising drug costs for patients and hinder their access to affordable treatment by educating physicians, patients, legislators, and the general public about the PBM role in the drug market and promoting policy changes that will lower the cost of prescription medicines.
How is ATAP funded?
ATAP is funded solely by contributions from its member organizations. ATAP does not receive funding from any external sources.
PBMs claim they help control drug costs for patients. Is that true?
There is no sufficient evidence that PBMs have helped control drug costs for patients. Since their creation, out-of-pocket expenses for patients have increased, and many patients continue to struggle with the high costs of drugs. While PBMs were originally created to control drug costs, on the whole they have since done the opposite, with the lack of oversight and transparency around their pricing practices greatly contributing to the problem.
What policy solutions does ATAP support to address this issue?
ATAP supports three bills currently moving through the United States Congress that aim to promote more transparency in the PBM pricing process.
1) The Prescription Drug Transparency Act (H.R 1316), introduced by Rep. Doug Collins (R-GA), would require PBMs to update their Maximum Allowable Costs (MAC) lists more frequently to prevent them from hiding the true costs of prescription drugs from doctors, pharmacists, and employers.
2) The Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act (S. 637) introduced by Sen. Ron Wyden (D-OR), would address the lack of transparency by requiring information on rebates, discounts, and “spread pricing” to be posted on the Centers for Medicare and Medicaid Services website. Following an initial two-year period of public reporting, the legislation requires that a minimum percentage of the rebates and discounts be passed on to the health plan. The legislation also requires Part D cost-sharing be based on the negotiated price between the manufacturer and the PBM.
3) ATAP members also support the Improving Transparency and Accuracy in Medicare Part D Drug Spending Act (H.R. 1038), sponsored by Reps. Morgan Griffith (R-VA) and Peter Welch (D-VT), which would require that community pharmacies receive their reimbursement from PBMs at the rate posted at the time the prescription is filled, not months later when the rate may have changed. This bill would prevent PBMs from increasing their rates in the future in order to squeeze more money out of pharmacists and physician practices.
ATAP is also working with policymakers at both the federal and state level to develop additional solutions that take a systematic approach to addressing drug costs and seek to better regulate PBM practices.
How can I help advocate for drug pricing transparency?
You can visit ATAP’s website, www.atapadvocates.com to stay updated on issues concerning drug pricing and PBMs. You can also follow the conversation on Twitter, @ATAPAdvocates. Physician groups and patient advocacy groups interested in joining ATAP’s efforts can contact Ally Lopshire (firstname.lastname@example.org) or Barbara Arango (email@example.com).