Rx transparency: Cracking the code 

In its inaugural Report to Congress on prescription drug spending and pricing trends in private health insurance plans, the Department of Health and Human Services summarizes key findings from a third-party analysis of four years of Prescription Drug Data Collection (RxDC) reporting. Although the report does not include any surprises and is light on recommendations, it does highlight efforts to improve the reporting to make the data more useful in the future. 

Background

RxDC is a prescription drug reporting mandate, adopted as part of the 2021 Consolidated Appropriations Act, requiring group health plans to report a wide range of health plan financial data points in both medical and pharmacy plans as well as from certain “point solutions” such as fertility and wellness providers. Prior to RxDC, comprehensive data on the net prices paid by private health insurance plans, issuers, and consumers did not exist for private health insurance coverage. The bulk of the reporting focus is on pharmacy. The government’s goal is to use the data to help improve their understanding of retail prescription drug prices and spending in private health insurance coverage.  

RxDC provides two options for employer filing. The first is on an aggregated basis with providers (pharmacy benefit manager, medical carrier, third-party administrator) filing on behalf of all their plans together. The second option is at the plan level, which requires the plan sponsor to work with providers and submit the data themselves.   

The main advantage of the plan-level filing is that plan sponsors see previously undisclosed data such as PBM “spread” (profit) on their specific plan(s) for that filing year as well as other retained income items from the PBM and drug level rebates for the top 25 drugs.     

What we learned from the Congressional Report

The initial report does not make significant recommendations but comments on trends and suggests improvements. Some observations are common knowledge such as: 

• The US pharmacy delivery system is complex 
• Formularies now have more tiers than previously 
• Common plan designs increase member cost share, which reduces adherence 

Interestingly, the report indicates that aggregated filing, which the Centers for Medicare & Medicaid Services has preferred to date, was not very useful because many vendors filed their data with no plan sponsor identifiers that would enable analyses at the plan level. 

The report indicates that the Office of Personnel Management and CMS are reviewing ways to make the data more useful for future filings. It appears they may require or request that providers include functionality to slice received data in a particular way. However, there may be a lag in structuring the dataset this way given the size and complexity of the data. 

Employers and RxDC

We believe the majority of employers have filed their RxDC reports on an aggregated basis. As noted, employers do not receive any data from an aggregated filing, but they do comply with their filing requirement. But we have observed an uptick in employers filing at the plan level to get previously undisclosed data.    

The lack of PBM transparency is a blind spot for plan sponsors. While more work is required to file at the plan level, some have decided it was worth the effort as an exercise to support their fiduciary duties under the Employee Retirement Income Security Act and to get the data on how contracted financial metrics compare to actual plan performance. We have seen instances where some key metrics like spread have been higher than expected.  

In the end, having the data that is obtained through plan level filing enables employers to have a more informed discussion with their PBM partner. It’s unclear what the future will hold but very clear that some employers have already benefited from obtaining more data on their pharmacy plans. We predict more will decide to take that path this year.