| Competition will trim Michigan drug costs |
| Wednesday, April 28, 2004 By State Rep. Scott Hummel The Detroit News |
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Competition lowers costs. If ever an opportunity existed to help lower the costs to consumers and employers for prescription drugs, it is now. A package of bills before the Michigan House Insurance Committee aims to do just that.
Pharmacy benefit managers (PBMs) are companies that design and operate health plans for insurers and employers. They negotiate prices with drug manufacturers, own and operate mail order pharmacies, determine patient co-payments and decide how much local pharmacies will be reimbursed for prescriptions. The major PBMs are under fire for their business practices, especially regarding their mail order pharmacies. These companies are being investigated, sued and legislated against for issues ranging from questionable pricing, reliability and safety to outright fraud and paying massive kickbacks. Most recently, the Federal Trade Commission initiated an investigation to examine whether pharmacy benefit managers make decisions that increase their profits while raising the costs of pharmacy benefits for their clients. Here in Michigan, the pharmacy benefit managers are desperately fighting a package of bills that would allow retail pharmacies to receive the same treatment as mail order pharmacies. Today, PBMs can structure reimbursements so retail pharmacy rates are artificially high, while the rates of the mail order pharmacies they own are artificially low. The pharmacy benefit managers then go to employers and say, “Our mail order rates are lower than retail. Let us force all your employees to use mail order, and we’ll save you a bundle.” The Consumer Prescription Protection Act would address this by clearly and explicitly guaranteeing consumers a free choice of where to fill prescriptions, with no added expense for employers, patients or dependents. The language guarantees the ability of local pharmacies to fill 90-day prescriptions at the identical price, quantity and co-payment terms as mail order services participating in the same health coverage plan. The pharmacy benefit managers and their backers are trying to scare Michigan legislators into believing the proposed legislation would increase employer costs. That’s pure baloney. They should drive down employer costs. I have yet to see increased competition result in higher prices. The high costs of prescription drugs affect everyone in our state. The Legislature must not leave any stone unturned in its search for ways to help keep costs low. The current prescription benefits system is fraught with problems, and everybody (except the pharmacy benefit managers) is suffering. For example: * Michigan will lose nearly $2 billion to out-of-state mail order facilities, costing 3,000 jobs and $117 million in wages. * Patients lose the convenience of shopping locally and are forced to order through mail order because pharmacy benefit mangers refuse to reimburse retail pharmacies at the same discounted levels as mail order. The truth is that the proposed legislation would double the number of options employers have to control health care costs — not just savings with mail order, but the same savings with retail as well. That’s real competition, and real competition lowers prices. State Rep. Scott Hummel, R-DeWitt, represents the 93rd House District. |
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