AHIP, PhRMA Try to Control Narrative as Heat on PBMs Intensifies

The health insurer trade group AHIP recently unveiled a new advertising campaign that accuses the pharmaceutical industry of deflecting blame for its “price-gouging” practices and undermining the “evidence-based, market-driven tools” that health insurers use to keep drug costs in check. But the campaign doesn’t appear to mention PBMs, even though they’re the ones conducting drug-price negotiations with manufacturers on behalf of health plans and employers.

Health care industry observers say that omission is unsurprising since PBMs are currently facing a growing wave of scrutiny — scrutiny that insurers likely want to minimize even if they don’t want to lobby for that explicitly. Pharmaceutical Research and Manufacturers of America (PhRMA), meanwhile, pounced on the opportunity to call out what it sees as the unspoken, PBM-supporting message in AHIP’s new campaign.

“If we needed any more proof that the health insurance and pharmacy benefit manager (PBM) industries are one and the same, look no further than a new ad campaign” by AHIP, the PhRMA public affairs team wrote in an April 24 email to reporters. “With PBMs facing increasing scrutiny on Capitol Hill, AHIP is hitting the airwaves to deflect any responsibility for the high cost of medicine many people face.”

Indeed, the three largest PBMs — which control roughly 80% of the market — are either owned by health insurers or share a parent organization with an insurer. CVS Health Corp. owns insurer Aetna and major PBM Caremark, The Cigna Group owns the insurer Cigna Healthcare and the PBM Express Scripts, and UnitedHealth Group is the parent company of UnitedHealthcare and Optum Rx.

However, it’s not clear whether the American public is keenly aware of those intertwined payer/PBM relationships — and insurers may want to keep it that way, suggests Gerard Anderson, Ph.D., a professor of health policy and management at Johns Hopkins University. “They don’t want to highlight the vertical integration that exists,” he tells AIS Health, a division of MMIT.

“It would behoove AHIP to try to distance themselves from the pharmacy benefit managers,” weighs in Lindsay Bealor Greenleaf, who leads the policy team at the Washington, D.C., consulting firm ADVI Health. “The spotlight is on PBMs right now so intensely, it makes sense that they’re being very careful with their terminology.”

‘Reject Big Pharma’s Distractions,’ AHIP Says

In an April 24 press release, AHIP said its new campaign will “blanket broadcast, social media, and direct placements in targeted outlets in Washington, D.C.”

“Health insurance providers are your bargaining power, securing savings and providing more choices than ever before — helping you access quality care you can afford,” begins one ad that is part of AHIP’s campaign. “But while health insurance providers are working to make health care more affordable, big pharma is spending millions of dollars on drug pricing distractions, designed to weaken your bargaining power and keep prescription drug prices high.”

The ad ends by urging viewers to “protect your bargaining power; help make health care more affordable. Reject big pharma’s drug pricing distractions.”

“Our new campaign spotlights the critical role health insurance providers play in making health care more affordable and accessible for Americans every day,” Robert Traynham, executive vice president of public affairs and strategic initiatives at AHIP, said in a statement. “And let’s be clear, Big Pharma continues to deceive and divert attention from real solutions and the root cause of high drug prices — Pharma’s anti-competitive, price-gouging tactics. Manufacturers keep prescription drug prices high and undermine the evidence-based, market-driven tools we use to lower prices and provide more choices in quality care for Americans. Consumers, businesses, and taxpayers are stuck paying excessively high costs. Big Pharma’s dishonest distractions have to stop.”

PhRMA, however, hit back that same day with an email to reporters that aims to dismantle AHIP’s claims.

“Insurance companies use PBMs to determine what patients pay at the pharmacy and what medicines are covered,” the trade group said. “They claim that all they do is negotiate savings for patients, but if that were true, then why are they facing lawsuits, investigations and regulation by state attorneys general, state legislatures, the Federal Trade Commission and United States Congress for their role in rising health care costs?

“The fact is, insurance companies don’t want anyone to look under the hood at the broken PBM business model that now makes up the majority of their profits,” PhRMA added.

PhRMA is not wrong about the growing chorus of criticism — and proposed reform measures — aimed at PBMs. Recent examples include:

  • In June 2022, the Federal Trade Commission (FTC) announced that it was examining the business practices of the six largest PBMs in the U.S.
  • In January, California filed a lawsuit against three major PBMs and three pharmaceutical companies, accusing them of inflating the cost of insulin and violating the state’s Unfair Competition Law.
  • The House Oversight and Accountability Committee on March 1 said it launched an investigation into PBM “tactics that are harming patient care and increasing costs for consumers.”
  • The Senate Committee on Commerce, Science and Transportation on March 22 advanced the Pharmacy Benefit Manager Transparency Act, which would ban spread pricing and “arbitrarily, unfairly, or deceptively” clawing back payments from pharmacies, as well as require PBMs to file an annual report disclosing a variety of information about their business practices.
  • On March 27, Ohio Attorney General Dave Yost filed a lawsuit accusing The Cigna Group’s Express Scripts, Blue Cross Blue Shield-owned Prime Therapeutics, Humana Pharmacy Solutions and Ascent Health Services of colluding to drive up drug prices. Yost called PBMs “modern gangsters” that have been “scheming in the shadows to control drug prices on all sides of the market” rather than using their negotiating power to drive down prescription costs.
  • On April 20, Senate Finance Committee Chair Ron Wyden (D-Ore.) and Ranking Member Mike Crapo (R-Idaho) released a “bipartisan framework” that the committee will use to address problems with PBMs and the drug supply chain. Some of the policy solutions in the framework include “delinking PBM compensation from drug prices to align incentives for lower costs” and “ensuring discounts negotiated by PBMs produce meaningful savings for seniors.”
  • On April 25, Bernie Sanders (I-Vt.) and Bill Cassidy, M.D. (R-La.) — who lead the Senate’s Health, Education, Labor and Pensions Committee — announced that they would hold a May 2 markup of a package of drug pricing legislation, including a bill called the Pharmacy Benefit Manager Reform Act.

Centene Corp. also has set aside more than $1 billion to settle lawsuits filed by multiple states that allege its legacy PBM division, Envolve Pharmacy Solutions, overcharged their Medicaid programs for prescription drugs. And Louisiana Attorney General Jeff Landry filed a lawsuit in April 2022 accusing Optum Rx of reaping unlawful profits from the state’s Medicaid program by exploiting the complexity of the pharmaceutical payment system.

“The momentum is there when it comes to PBM reforms,” Greenleaf tells AIS Health. “PBMs and health plans have benefited historically from a really complicated supply chain and lack of transparency in the system that has allowed for manufacturers to be solely targeted up until this point,” she adds. She cites the fact that the Inflation Reduction Act mainly left PBMs alone while including measures that were bitterly opposed by drugmakers, such as imposing penalties when drug prices rise faster than inflation and allowing Medicare to negotiate the price of select medications.

“Now that you have key Democrats on record being this critical of PBMs, it’s going to be really hard to unwind that,” Greenleaf continues. “Once members of Congress dive into issues like this, their eyes are wide open.”

A recent Avalere survey of former congressional staffers and presidential administration members found that 78% believe that it is likely or very likely that lawmakers will pass PBM oversight and transparency legislation during the 118th Congress.

Anderson says the new advertising campaign spearheaded by AHIP is almost certainly too late to assuage lawmakers’ mounting concerns about PBMs. “But the specifics of what to do are very much uncertain,” he tells AIS Health. “And so, creating additional uncertainty makes it harder to come up with a concrete solution.”

Contact Greenleaf at lindsay.greenleaf@advi.com and Anderson at ganderson@jhu.edu.

This article was reprinted from AIS Health’s biweekly publication RADAR on Drug Benefits.

© 2024 MMIT
Leslie Small

Leslie Small

Leslie has been working in journalism since 2009 and reporting on the health care industry since 2014. She has covered the many ups and downs of the Affordable Care Act exchanges, the failed health insurer mega-mergers, and hundreds of other storylines spanning subjects such as Medicaid managed care, Medicare Advantage, employer-sponsored insurance, and prescription drug coverage. As the managing editor of Health Plan Weekly and Radar on Drug Benefits, she writes and edits for both publications while overseeing a small team of reporters who also focus on the managed care sector. Before joining AIS Health, she was a senior editor for the e-newsletter Fierce Health Payer, and she started her career as a copy editor at multiple local newspapers. She graduated with a dual degree in journalism and political science from Penn State University.

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