CMS Administrator Norwalk says releasing data on Medicare prescription drug benefit discounts would undermine negotiations

Mar 5 2007

CMS Administrator Leslie Norwalk in a letter to lawmakers on Thursday said that the agency will not disclose information on discounts obtained by pharmacy benefit managers for Medicare prescription drug plans, CQ HealthBeat reports.

House Oversight and Government Reform Committee Chair Henry Waxman (D-Calif.) last month sent letters to Medicare drug plans requesting data to determine the size of drug plans' profits and whether discounts negotiated by PBMs with drug makers were passed on to beneficiaries. Rep. Thomas Davis (R-Va.) sent a letter to CMS requesting the information.

Norwalk in the letter wrote, "Several independent entities, including the Congressional Budget Office and the Federal Trade Commission, have concluded that public disclosure of negotiated price concessions will reduce the ability of pharmacy benefit managers and plans to negotiate significant discounts."

She continued, "We recognize that Congress has a legitimate role in overseeing" the Medicare drug benefit and "are reviewing other authorities under which we may be able to make certain information available."

Norwalk noted an FTC analysis finding that collusion and higher prices are more likely to result when competitors know prices charged by other companies.

She also noted a CBO report that found disclosing the discount data could increase the cost of the drug benefit by as much as $40 billion over 10 years.

In a separate letter sent to Waxman on Thursday, the Pharmaceutical Care Management Association -- the lobby that represents PBMs -- said that release of the data would increase prices for the drug benefit and beneficiaries.

Association spokesperson Phil Blando said, "To the extent that any information is provided to the committee, whether from CMS or individual companies, we think it's critical that the committee safeguard the information" (Reichard, CQ HealthBeat, 3/2).