The federal government could cut the full retail price of some prescription drugs if it sets up a web-based drug outlet mall, but “TrumpRx.gov” could also create new problems for employers.
Dae Lee and Natalie Oehlers, pharmacy benefits law experts at Buchanan Ingersoll & Rooney, write about the possible dark side of TrumpRx in a new analysis.
The creation of TrumpRx is part of an agreement the administration of President Donald Trump negotiated with Pfizer.
The TrumpRx proposal calls for Pfizer and other drug manufacturers to offer drugs directly to U.S. consumers through a government website that would, in effect, cut out all middlemen, including pharmacies, pharmacy benefit managers and prescription drug wholesalers.
The federal government already sells individual major medical plans to consumers through HealthCare.gov and Medicare plans to consumers through Medicare.gov.
TrumpRx designers could address the kinds of concerns Lee and Oehlers discuss before or after the website comes to life.
But here are some of the worries that Lee and Oehlers have now.
Pharmacies: If TrumpRx succeeds, one concern is that it could add to the already brutal pressure on brick-and-mortar pharmacies. The owners of Walgreens sold the company to a private equity firm, and the owners of Rite Aid recently shut down all of the chain’s thousands of drug stores.
For brick-and-mortar pharmacies, extra oversight from pharmacy benefit managers may be as much of a problem as extra price competition, Lee and Oehlers write.
“Whenever a new discount pathway is introduced — whether through coupons, chargebacks, or manufacturer cash programs — PBMs increase scrutiny against pharmacies significantly,” the lawyers write. “In fact, pharmacies will be expected to document with precision acquisition costs, coupon applications, and any overrides. Failure to do so can trigger recoupments, clawbacks, or even network termination by PBMs.”
A tighter squeeze on brick-and-mortar pharmacies could kill more of them and put more employer plan participants in pharmacy deserts.
Information: If employer plan participants buy drugs from TrumpRx instead of from ordinary pharmacies, they might still send the receipts to the plans and ask for reimbursement.
But, depending on how TrumpRx works and what kind of connections it does or does not have to the rest of the pharmaceutical distribution universe, employers and plan administrators may not hear about the prescriptions until the requests for reimbursement arrive.
Employers may not notice a spike in demand for opioids until long after Dr. Feelgood has run away from authorities or a surge in demand for flu medicine until long after a deadly flu outbreak has come and gone.
Employers may not even get enough of the right information at the right time to show regulators or others that they’re being good pharmacy benefits fiduciaries, according to Lee and Oehlers.
Costs: Shoppers at ordinary outlet malls often notice that the prices for shoes and shirts are just so so.
Academic researchers have found that Mark Cuban’s Cost Plus online pharmacy, which seeks to cut out complicated PBM pricing arrangements and simply add flat, clearly disclosed fees to manufacturers’ prices, usually charges insured patients higher out-of-pocket amounts than they would pay if they used ordinary health coverage to buy the same prescriptions from brick-and-mortar pharmacies.
Lee and Oehlers say employers’ lack of drug utilization information may hurt their ability to manage formularies, or lists of covered drugs.
“Total drug spend may become more unpredictable,” the lawyers write.
Hassles: “The existence of government-advertised discounts will make employees question why their employer-sponsored plan cannot deliver similar pricing,” Lee and Oehlers predict.
“This transparency gap will put pressure on human resource leaders and benefits committees to renegotiate PBM contracts,” the lawyers add. “Employers will also need to demand point-of-sale discounts, greater visibility into PBM-affiliated rebate aggregators, and full disclosure of fees and spreads.”
The strategies employers use to adapt, such as new types of alternative funding models, could conflict with federal benefits laws and state insurance laws, the lawyers warn.