CHICAGO —With pharmacy benefit managers playing an increasingly pivotal role not only in drug pricing but also in administering patient drug benefits, the American Medical Association (AMA) today called for oversight and transparency for the lightly regulated industry.

The new policy, part of a report adopted at the AMA’s Annual Meeting, responds to pharmacy benefit managers (PBMs)–middlemen–operating in a “black box” with limited transparency to show what goes on behind closed doors. As drug prices rise year after year, the AMA is concerned that the rebate process results in list prices above what they would be absent rebates, as neither PBMs nor manufacturers have an incentive to lower list prices.

The new AMA policy supports applying manufacturer rebates and pharmacy price concessions to drug prices at the point-of-sale to benefit patients – who rarely see the negotiated discounts that PBMs strike with drug companies and health plans. In addition, the new policy supports improved transparency of PBM operations, including disclosing financial incentive information as well as formulary information.

“It’s time to pull back the curtain on pharmacy benefit managers and how their practices negatively impact patients. How is it that PBMs and health plans profit from negotiated discounts on prescription drugs, while patients pay co-pays based on high drug list prices that even the plans themselves are not paying?” said Russell Kridel, M.D., a member of the AMA Board of Trustees. “Because of market concentration and lack of transparency, patients and physicians are essentially powerless in the face of PBM pricing and coverage decisions.”

The AMA’s TruthinRx campaign seeks to expose the role PBMs play in drug pricing, along with pharmaceutical companies and insurers.

“Overall, regulators must better understand and control the costs to patients and the systems that are resulting from PBM practices,” the report noted. The report’s recommendations call for PBMs to be actively regulated under state departments of insurance. On the federal level, new policy underscores that PBMs, like health plans, should be subject to federal laws that prevent discrimination against patients, including those related to discriminatory benefit design and mental health and substance use disorder parity.

“PBMs have assumed the role of insurers but without having to face similar oversight. The ability of patients and physicians to have the information they need to make key decisions regarding medication, and of policymakers to craft viable solutions to high and escalating pharmaceutical costs, has been hampered by the often byzantine and confidential arrangements that are driving increased medication prices without a clear and justifiable reason.,” Dr. Kridel said. “This lack of transparency makes it exceedingly difficult for physicians to determine what treatments are preferred by a particular payer at the point-of-care, what level of cost-sharing their patients will face, and whether medications are subject to any step therapy or other utilization management requirements. For patients, lack of transparency in their drug coverage may lead to delays in necessary medication treatment.  Enough is enough. It’s time to strongly regulate PBM practices and operations to protect our patients.”