Drug Buying Groups Reputation
Has Lawmakers Considering
Regulation

By RYAN BASEN
Capital News Service

ANNAPOLIS - Pharmacy owner Tom Connelly is tired of people
blaming him for rising prescription drug costs -- it's the fault
of pharmacy benefit managers.
Connelly, from Cecil County, often sells medications in bulk to
these firms, who then sell them to businesses and government
agencies. These pharmacy benefit managers take advantage of the
free market, he said last week, manipulating such transactions to
maximize profits at the expense of consumers.
To curb this activity, the General Assembly is considering a
plan to regulate them. A bill, sponsored by Cecil County Democrat
David Rudolph, chairman of the House subcommittee on
pharmaceuticals, passed the House and was heard by the Senate
Finance Committee Wednesday.
Rudolph's bill would require these firms to confidentially share
their business deals with the Maryland Insurance Administration
and forbid them from providing pricier drugs when generic ones
are available, unless a consumer's medical concerns dictate it.
If it passes, Rudolph said, it could significantly cut
Marylanders' prescription drug costs.
"PBM's are running amok in our country," Rudolph said. "It's
just wrong...They have a tremendous influence on the costs of
health care and they aren't regulated."
Such firms supply prescription drugs to about 200 million
Americans by acting as the Costco of the drug industry and
sometimes operating mail-order plans.
They have saved employers and states on drug costs, according to
a 2003 study by the U.S. General Accounting Office, which said
federal employees saved 18 percent on brand-name drugs. But some
lawmakers said the companies could boost savings significantly if
they cleaned up their act.
In the last decade, they have been accused of unnecessarily
substituting more expensive drugs, defrauding Medicare and
Medicaid and profiting from a "spread": negotiating separate
deals with retail pharmacies and employers and hiding those deals
from the other.
Hence, Rudolph's bill "would be a very useful piece of
legislation," Connelly said. "Even used car salesmen have
transparency."
The insurance administration supports the bill, spokeswoman
Karen Barrow said, because it calls for "the appropriate amount
of oversight and consumer protection."
Two states and the District have passed similar bills and
others, including Pennsylvania and California, are considering
them in part because of 31 recent legal actions against the firms
that have exposed shady business practices.
But 10 states have defeated bills similar to Rudolph's, said
Phil Blando, vice president of the Pharmaceutical Care Management
Association.
The proposed regulation would extend government too far into the
private sector, Blando said, allowing transaction details to be
leaked. Blando likened transparency to "requiring PBMs to play
poker with the cards up and everyone else's hidden."
The bill would ultimately drive drug costs up -- not down, he
said.
Bob Enton, a Maryland lobbyist for CareMark, a leading pharmacy
benefit manager, cited a Federal Trade Commission report that a
California bill similar to Maryland's would do just that.
"Public disclosure, which sounds good in concept," Blando said,
"is a horrible idea in practice."
Delegate A. Wade Kach, R-Baltimore County, said he worries that
Rudolph's bill would compound the state's health care problems
instead of help solve them. He called for the federal government
to intervene in another fashion.  
"I am concerned with some of the profits these companies are
making," said Kach, one of four delegates to vote against the
bill March 17. But "drug companies have been very innovative with
new drugs...If you begin to have government stick its nose in
their business, what's going to happen to the research
component?"
Charles County Democrat Thomas Middleton, chairman of the Senate
Finance Committee, suggested Maryland should ask for transparency
in its next contract with the firms as an alternative to
regulation.
Otherwise, he said, the Senate may need more time to review the
bill. The legislative session ends Monday but Middleton has
called for a work group soon.
"Obviously the House is way in front of the Senate with this
bill," Middleton said.
Rudolph urged them to catch up.
"You could easily say there's not enough time to do this bill,"
Rudolph said. "But we cannot wait another year."