Thursday, August 12, 2010

DC Fracas Over CMS Transparency Proposal

My little ol’ blog post about the Centers for Medicare & Medicaid Services’ (CMS) drug price RFP—CMS Wants Public Transparency to Pharmacy Profits—triggered some heavy-duty maneuvering by the industry’s major lobbying organization.

The Pharmaceutical Care Management Association, which represents pharmacy benefit managers (PBMs), put out a scorching press release on Tuesday citing Drug Channels titled CMS Turns ‘Transparency’ Spotlight on Drugstores.

Then, political heavyweight website The Hill published Pharmacies, drugstores object to Medicaid price transparency effort. The Hill also posted a previously unreleased letter from NCPA and others to CMS that was presumably leaked by the major pharmacy associations.

And in a neat twist for all you conspiracy lovers, the letter that I called “Top Secret” in my original post is not the one obtained by The Hill.

This fight will go on as long as it has to. And if this is your first visit to Drug Channels, you have to comment.


In response to my original blog post, PCMA President and CEO Mark Merritt said:
“We can’t have a double standard in which drugstores are shielded from the same type of transparency they routinely demand of PBMs. This is especially true of the independent drugstore lobby, which has for years demanded more ‘transparency’ of others in the pharmacy supply chain. Now, they have an opportunity to provide more of it themselves. A good place to start would be to release the ‘top secret’ letter opposing pharmacy transparency that they sent to CMS.”

“Regardless of the substance of CMS’ request, independent drugstores have only themselves to thank for bringing this upon the retail pharmacy community. Since independent drugstores are now the least transparent part of the pharmacy supply chain, it should be no surprise that their own decade-long campaign for ‘transparency’ has finally come full circle.”
Just so you know, PCMA’s news release came as a surprise to your friendly neighborhood blogger. Let's hope Phineas Taylor Barnum was right when he said: “Any publicity is good publicity.”


The Hill obtained a letter dated August 6 sent to CMS jointly by the American Pharmacists Association, the Food Marketing Institute, the National Association of Chain Drug Stores, and the National Community Pharmacists Association. They write:
“We have identified no legal authority for CMS to collect and distribute pharmacy acquisition cost data. The RSP (Retail Survey Price) law, which is the only authority cited by CMS, limits the agency’s authority to the collection of RSP – prices pharmacies charge consumers. There is no authority for CMS to collect and distribute prices pharmacies pay for drugs… CMS should not exceed its statutory authority by collecting, using, and disclosing wholesale price data in a manner that does not comply with the AMP provisions of the statute.”

Just for the record, I asked both NCPA and NACDS for a letter sent to CMS based on the following announcement from the July 27 NCPA e-NEWS WEEKLY:
“NCPA and the National Association of Chain Drug Stores last week sent a detailed letter to the Centers for Medicare & Medicaid Services with community pharmacy's views on how the new definition of Average Manufacturer Price, the new Federal Upper Limits (FULs), and the posting of weighted AMP and Retail Survey Price (RSP) data should be implemented.”
In other words, the original, still unreleased letter was apparently sent the week of July 19—two weeks before the letter referenced in The Hill’s article.

So, will an intrepid trade press journalist now follow-up on this story?


Here's a quick refresher of the Fight Club Rules. Click here if you can't see the video.

However, this chart accurately summarizes the average reader's knowledge of the rules (source).


  1. Any idea what the Food Marketing Institute is getting in on this battle for?

  2. David Schwed RPhAugust 12, 2010

    With the Alabama pricing available to all primarily based on purchasing by independents, since chain pricing is obfuscated by corporate segmentation, the CMS study from the purchase side is redundant.

  3. FMI represents a lot of large supermarket chains that have pharmacies in them.

  4. So, you really got my attention with the transparency blog from yesterday, but today’s was AWESOME. I’m still laughing about the Fight Club Rules Understanding bar chart. Not to mention the underlying industry brawl (that you helped incite, of course!). I’ll bet you are having some big fun with this one – good for you, it’s great work!

  5. Adam,

    You had better watch out, you might lose some clients over this!

  6. I appreciate your concern for my business, but I should be safe. My clients typically work at manufacturers of pharmaceuticals, biopharmaceuticals, or medical devices. Executives at these companies are trying to figure out how to deal with changes in the channels for their products.