By Matthew DiLoreto
With nearly eight in 10 adults saying prescription drug costs are unreasonable, Governor Murphy’s commitment to tackling drug prices is a noble and necessary commitment – a commitment that consumers, lawmakers and the healthcare industry health support. In fact, many lawmakers have joined Governor Murphy in championing a package of bills aimed at creating greater transparency, closing prescription drug reporting loopholes and lowering prices.
Ultimately, the goal is to get to the root of prescription drug pricing, including the factors and players involved.
Healthcare is confusing – for patients, caregivers, legislators and even providers. The complex nature of our healthcare system requires an understanding of the unique roles and responsibilities of each entity in the supply chain to ensure accurate and useful data reporting. The best policy comes from education and knowledge, not from the denunciation of stakeholders and the frustration of legislators.
Unfortunately, if passed in its current form, the proposed legislative package would not fully benefit New Jersey consumers.
Few would believe that there are entities within the healthcare supply chain dedicated to creating efficiencies and streamlining drug delivery. Yet healthcare distributors and pharmaceutical service administrative bodies (PSAOs) focus on these goals alone, saving the industry money and ensuring providers can focus on the patient care.
Healthcare distributors act as essential logistics providers within the healthcare supply chain, working around the clock to ensure the safe, efficient and reliable delivery of medical products, including medicines, medical supplies and durable medical equipment on a daily basis. With their innovative solutions, retailers save the healthcare industry between $33 billion and $55 billion a year. Most consumers have recently enjoyed the benefits of healthcare distributors through their herculean efforts to distribute the COVID-19 vaccine and related products to all corners of the state and country at the height of the pandemic.
As an efficiency-driven industry, distributors also provide other crucial services. Recognizing that independent pharmacies are at a disadvantage when negotiating with Pharmacy Benefit Managers (PBMs) and other large healthcare entities, some healthcare distributors have developed PSAOs.
PSAOs are administrative intermediaries that small independent pharmacies in New Jersey voluntarily hire for a flat monthly fee to help them with back-office tasks such as paperwork, filing claims with pharmacy benefit managers, and filing. assistance with network contracts. PSAOs remove onerous, non-patient related tasks from pharmacy owners’ plates, freeing them to focus on health services at the pharmacy counter.
Unfortunately, three of the four bills being considered by the New Jersey Legislature distort the function of health care distributors and PSAOs.
Assembly Bill 1747 and Assembly Bill 536 confuse the very different roles of PSAOs with PBMs. Simply put, PSAOs are not PBMs – PSAOs have no visibility into or influence over the prices patients pay over the pharmacy counter and play no role in designing patient benefits. Including PSAOs in either bill alongside PBMs or prescription drug pricing and transparency will only create burdens for state regulators, independent pharmacies and the PSAOs.
Assembly Bill 2840 misrepresents the responsibilities of PSAOs and health care distributors. Similar to A-1747, A-2840 requires both entities to report information that they simply cannot access or that would be redundant for the state. The former could force PSAOs to shut down in New Jersey, while the latter would require healthcare distributors to report expensive, redundant and possibly inaccessible data.
With the proper legislation, Governor Murphy and the New Jersey Legislature have the opportunity to positively impact the state’s prescription drug market. However, if these bills are passed in their current form, they will create costly and cumbersome bureaucracy for the government. To ensure adequate, accurate, and non-redundant reporting of prescription drugs and devices, all stakeholders and legislators must work together to identify solutions that will result in thoughtful policy without wasting time and resources.
I respect the Governor’s and Legislature’s goal of reducing costs and creating transparency and urge them to amend A-1747, A-536 and A-2840 to properly reflect the role of blockchain entities. supply, including PSAOs and healthcare distributors.
Matthew DiLoreto is Senior Vice President of State Government Affairs and Alliance Development for the national trade association Healthcare Distribution Alliance.
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