It has been a hard week for pharmacy benefit managers.
Not financially. Emotionally.
Several PBMs were asked to explain things they normally keep in their footnotes. Some of them were asked twice, and a few were asked in public. The public questions caused visible strain and discomfort.
PBM Executives described the moment as unsettling, comparing it to turning on the lights with no warning. One nervously requested a moment to locate the correct spreadsheet. The internal one.
Transparency proposals circulated widely on the hill. Papers written long ago were dusted off and read again, and questions were asked using complete sentences. This is the the stuff they were warned about in PBM executive school.
“PBMs have always done their best work in the shadows, hidden from the light by layers of beurocracy and paperwork. Its a system that has always worked well from day one. Now, for some reason, people want to know how rebates work. Where they go. Why no one can find them later. They won’t just take our word for it anymore.” Said one leading PBM CEO who wished to remain anonymous.
A spokesperson for the PBM lobby said rebates lower costs for everyone. He did not specify when or how, but he did say “everyone” with strong confidence.
Pharmacists on the hill were most unruly, holding picket signs written in ink. They mentioned contracts. Proprietary ones. The kind that cannot be read, summarized, or discussed without legal counsel present. The kind that protect innovation by preventing understanding.
Another PBM executive said the scrutiny felt personal. He noted that opacity had always been part of the value proposition, and removing it changes the culture. “This is going to be very bad for shareholders, I mean patients!” He said.
PBMs representatives stressed how much they are misunderstood. They do important work behind the scenes like negotiating, leveraging, and optimizing. And none of which fits neatly into a chart that can be shown to lawmakers. They don’t feel like their intangible attributes are being appropriately accounted for.
One executive said the real victims are innovation and flexibility. Another said the system was never meant to be simple. She pointed out how the most amazing things in the world are extremely complex, and went off on a long tangent, interrupted once by a sip of Chardonnay. There was some resemblance to Charlie Brown’s teacher, but there was reference to NASA and landing on the moon.
Industry groups warned that too much transparency could confuse patients. Patients might think lower list prices matter, and then misunderstand incentives. They might ask why a drug costs more after a rebate is applied.
That would be unfair and unfortunate.
A consultant described the week as “challenging but manageable.” He billed accordingly.
Lobbyists reassured stakeholders that nothing fundamental would change. Even if the legislation was eventually signed there was nearly a 2 year lead time to make the books appear suitable. That cushion is more than enough to get through the midterms and see where the leverage points exists to offer a manageable solution.
Visibility can certainly be managed, and language can be refined. The proprietary rebates will continue in one form or another, and contracts will remain complex.
Savings will still be passed along in spirit.
PBMs will come out on top. They always do.
