Pharmaceutical benefit management companies will have the opportunity to become part of a "public-private partnership" with the federal government under Rep. Thomas' (R-Calif.) upcoming Medicare prescription drug bill.

"What we're offering you is not a limited partnership, not an employer-employee role, but a full partnership," Thomas told the Pharmaceutical Care Management Association's Legislative Conference May 18 in Washington, D.C.

The House Ways & Means/Health Subcommittee Chairman declared that the choice between the House GOP Medicare plan or the Clinton Administration/ Democratic plan "will define in large part the name of your organization and to a very good extent the role you people play in health care."

Thomas characterized the Clinton Administration plan as relegating PBMs to the status of "a claims processor under HCFA." There "will be a selection of a single carrier - oh, excuse me - PBM in a particular area in which you'll have zero flexibility in doing what...you take pride in doing professionally."

Thomas dismissed the notion that the Democratic approach would allow meaningful contract negotiations. HCFA is only interested in renewing contracts with "someone who is pliant, who goes along with what HCFA thinks is most appropriate, especially if you're down to the obvious end result, which is HCFA knowing fee schedules and price controls."

During the Health Subcommittee's May 11 hearing on President Clinton's Medicare drug plan, GAO and CBO both testified that the plan could limit PBMs' abilities to practice the cost-saving strategies they use in the private sector (¹ Also see "PBMs Must Use "Aggressive" Rx Cost Containment In Medicare - Rep. Thomas" - Pink Sheet, 15 May, 2000.).

In contrast, Thomas maintained, the Republican plan would give PBMs "the opportunity on an actuarially equivalent basis to shape [the standard drug benefit] the way you professionally believe it should be shaped." PBMs would have "flexibility" in terms of "cost sharing, deductibles, formularies, tiered copays, generic substitutions, contracting with others."

PBMs would be "full partners," Thomas said, "but it requires you to think about playing a slightly different role as well, either as a partial risk taker or as an innovative structure that passes risk through to reinsurers."

"It is an evolving role for you," Thomas continued. "It is one that if you think about it is an obvious one. I just maybe have presented it to you a little sooner than you wanted to."

Like the revised Medicare drug plan from Sens. Breaux (D-La.) and Frist (R-Tenn.), Thomas' bill would create a new federal agency that "would negotiate and foster competition," Thomas said (² Also see "Medicare Rx Milestones: House Bill By Memorial Day, Enactment By July 4" - Pink Sheet, 15 May, 2000.).

However, while the Breaux/Frist plan would put the agency outside of HCFA and HHS, Thomas said "it can be inside HHS. That's not a problem, as long as it understands its mission...is to negotiate so that you have a competitively bid program profile."

Thomas urged PCMA and its members to become more involved in the process of drafting Medicare legislation.

He noted that PBMs "have not played a major defining role" so far in the drug benefit debate. "In this particular area, I don't think you're going to be able to sit on the sidelines," he said. PCMA is still developing a policy on a Medicare drug benefit (³ Also see "PBM Medicare Rx Contracts Would Last Five Years Under Democrat Proposal" - Pink Sheet, 8 May, 2000.).

During a discussion of the current Medicare proposals, Merck-Medco Senior VP Terry Latanich said PBMs need to take a stronger stance, because the proposals expect PBMs to perform "in a way that often isn't what a PBM does in our mind." Merck has worked closely with Thomas in the drafting process.

Eckerd Health Services President Francis Marasco indicated that the roles outlined for PBMs in the Administration's and Thomas' plans are both inappropriate. He said becoming a "claims processor" under the Administration's plan "is not acceptable" and remarked that under Thomas' plan, "we can choose if we want to become an insurance company."

"For most of the PBMs - one or two exceptions perhaps - neither one of those positions seems to be a practical solution without some major change," Marasco said.

PBMs Would Be "Full Partners" With Government Under Thomas Medicare Bill

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