PBM Inquiry: Fresh Hope for HOSP


The Health System Owned Specialty Pharmacy Alliance (HOSP) is a nationwide member-led organization of leading health systems. Its vision is “to be the face and voice of the integrated specialty pharmacy industry,” while its mission is outlined as substantiating, promoting and advocating that “the fully integrated health system specialty pharmacy model is the optimal way to improve patient outcomes while reducing the total cost of care.”

Earlier this month, HOSP welcomed the news that the Federal Trade Commission (FTC) is to initiate an investigation into the practices of pharmacy benefit managers (PBMs). HOSP commented: “Too often, hospitals, providers and most importantly, patients, pay the price—both financially and at the expense of improved health outcomes—for the anticompetitive practices that have only served to boost profits for a handful of companies.”

To further discuss the alliance’s reaction to the FTC investigation news and explore its vision for the integrated specialty pharmacy industry, Pharma Commerce sat down with Melissa Goff, VP of Outpatient Pharmacy at Avera Health, who serves as HOSP’s Advocacy Chair.

Pharma Commerce: Can you explain why the Health System Owned Specialty Pharmacy Alliance (HOSP) welcomed the news of an FTC investigation into PBM business practices?

Melissa Goff

Melissa Goff

Melissa Goff: We’re happy that the FTC is taking a deep dive into researching this industry and gathering data to better understand PBM practices. PBMs have been shrouded in secrecy for many years; I don’t know if anyone outside of the drug channels industry has a good idea of what these middlemen players do in this space. But I can tell you that, year after year, they’ve become bolder in anti-competitive practices. At HOSP we’re calling for transparency in the drug reimbursement space; we stand against those practices that limit patient choice.

When PBMs were first formed in the late sixties, they served a necessary function in processing claims and dealing with insurance company administration, etc. But they started to vertically integrate and became not only the payer, but also the PBM that determines the formulary and also the pharmacy that dispenses the medications. With that they developed competing priorities and interests.

What would you like to see, realistically, come out of this FTC investigation?

First and foremost, we hope that the investigation sheds light on what the PBMs do. I think the data that the FTC is requesting will certainly help to illustrate that and point to the negative impact that PBMs are having on the US drug prescription drug market. Most consumers really have no idea what PBMs are, let alone the enormous influence they have, not only on which medication they can take but where they can get it filled, which pharmacy they can go to and, ultimately, how much it is going to cost them. The PBM really does decide almost all of those things in many instances. In shedding light on who these big players are and bringing the average consumer up to speed with the way they operate, we hope that the investigation will result in changes to the way that the PBMs operate, so that reimbursement practices are fair and transparent across the board. We’d also like to see revisions to the PBM practice of imposing network restrictions or network lockouts that limit patient choice as to where they can fill their prescriptions. And smaller things, like how they restrict pharmacies in performing the most basic patient-care functions, such as mailing out prescriptions. For example, in a rural area such as South Dakota, where I’m located, an integrated hospital pharmacy may not be able to mail out prescriptions to its specialty care patients, leaving the patients no choice but to go to a big mail-order pharmacy.

Would you say that pressure from organizations like HOSP has driven the FTC to take this action?

We’re a relatively new organization, but this is certainly one of our top advocacy priorities. But we’ve seen a lot of pharmacy associations and organizations applauding the FTC decision and promoting inquiries and investigations into PBM practices. I think those collective voices have been heard. If you look at the number of comments the FTC received when it opened a request for information in February—24,000 responses—they certainly played a role in the decision to launch this investigation.

What have been HOSP’s main priorities in the 18 months since it was established?

There’s a lot of work to do and, as I mentioned, we are a relatively new organization. PBMs really do hold all the power, and with three vertically integrated PBMs controlling 80% of the market, it’s almost impossible to fight for fair practices as a standalone pharmacy, hospital, or health system. So, an organization like HOSP is really important to bring collective voices and advocacy efforts together in order to have more of an impact. HOSP has grown its membership base in the last 18 months and established a committed board of directors, who support our mission to develop industry best practices and advocate for common interests in support of the gold standard care that only an integrated health system specialty pharmacy can provide.

It is a priority for us to be very active in the advocacy space on issues that are important to our members, as well as the patients that we serve. PBM reform is a great example of what we are taking a stance on. We are also very active in protecting the 340B program, which is a vital to many of our health systems and patients. Safety-net hospitals depend on the 340B program to support the care provided to vulnerable patient populations, as well as expand access to prescription medications to those who are unable to afford them. In fact, just after the news this month of the FTC investigation, HOSP responded to another ruling, this time applauding the US Supreme Court’s recent determination that the HHS payment cuts to hospitals that participate in the 340B Drug Pricing Program were unlawful.

Drug pricing, of course, is a pretty complex and opaque thing, whether you’re a country with PBMs or not. Do you think much can be realistically achieved in this area even if PBM activities are curtailed?

That is a difficult question, but I think, overall, when we talk about advocating for transparency and accountability, it all goes back into drug pricing. For example, what are the rebates that are incorporated into the net cost of a prescription medication? What a patient is paying is based on a list price, not the net price that incorporates the rebate. Even having transparency on that, I believe, would help create pressure to drive down drug prices.The consumer would then have a better understanding of what the true cost of their medication is versus how much these middle men entities are retaining.

To learn more about HOSP, visit their website. You can learn more about the HOSP Advocacy Committee here.

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