A federal advisory panel has recommended that greater transparency for pharmacy benefit managers be required in private health plans. The Department of Labor ERISA Advisory Council voted unanimously to urge the department to extend existing financial disclosure requirements to PBMs.

The council said PBMs should tell health plan sponsors about all forms of direct and indirect compensation received in association with providing services to each health plan. The council found that some forms of PBM compensation have the potential for creating conflicts of interest and that disclosure of PBM compensation would better enable plan sponsors to determine if compensation paid for PBM services is reasonable.

"We commend the ERISA Advisory Council on its action and we are also excited that U.S. Labor Secretary Thomas Perez has indicated his desire to ensure those long-overdue changes are implemented," said NCPA CEO B. Douglas Hoey, Pharmacist, MBA. Hoey noted that Perez echoed “many of the concerns expressed by NCPA. Secretary Perez said that it is important for plan sponsors to do a 'deep dive' on issues such as PBM compensation in order to ensure that beneficiary monies are not being 'thrown away' and that the plan is not leaving money 'on the table' that could be more wisely spent."

NCPA was invited by the council to testify and offered specific recommendations. Additionally, the council heard from, among others, Princeton University; the University of Michigan; General Dynamics Corp., on behalf of the HR Policy Association; and Honeywell International, Inc.

"It's clear from the testimony provided to the advisory council that payers of prescription drug plans require more data to ensure that PBMs are delivering on the value they promised," Hoey concluded. "The council's vote is a critical step toward ensuring that happens."

(Hat tip to NCPA)