Beyond Philidor: Could Valeant's New Pharmacy Arrangement Heighten Scrutiny From Lawmakers?

Dec 16, 2015, 11:01 ET from Pharmaceutical Care Management Association

WASHINGTON, Dec. 16, 2015 /PRNewswire-USNewswire/ -- The Pharmaceutical Care Management Association (PCMA), the trade group representing America's pharmacy benefit managers, today questioned whether Valeant's new copay offset program could increase public scrutiny since key aspects seem reminiscent of the allegations that concerned lawmakers about Philidor.

Unlike programs for the poor and uninsured, copay offset programs are designed to encourage insured patients to bypass less expensive drugs (which typically have lower copays) when multiple options are on the formulary. Such practices are illegal in federal programs and have long been under scrutiny by the Health and Human Services Office of Inspector General (OIG) because they are viewed as "kickbacks" that encourage wasteful spending for the profit of an outside third party.

As Valeant notes, "because of government regulation, the cost-sharing program will not be applicable to patients with government insurance." 

"Copay kickback schemes increase drug costs by undermining the formularies used by employers, unions and public programs," said PCMA President and CEO Mark Merritt. Last week, Mr. Merritt testified before Congress on the issue of rising drug prices.

Copay offset programs are estimated to increase pharmacy spending by $32 billion according to earlier research commissioned by PCMA

As details of the arrangement emerge, key questions for policymakers, the news media, and others include:

  • Since copay coupons are banned as illegal kickbacks in Medicare and other federal programs, is Valeant's program good for the commercial marketplace?
  • What incentives is Valeant offering retailers to dispense brands instead of generics?
  • Since this program only offers an "initial" zero dollar copay, is it a bait and switch?

PCMA is the national association representing America's pharmacy benefit managers (PBMs).  PBMs administer prescription drug plans for more 253 million Americans who have health insurance from a variety of sponsors including:  commercial health plans, self-insured employer plans, union plans, Medicare Part D plans, the Federal Employees Health Benefits Program (FEHBP), state government employee plans, managed Medicaid plans, and others.

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SOURCE Pharmaceutical Care Management Association