Medco's Clash With Clarity

Revolution

Even now, the big PBMs continue to resist major changes.

Certainly, they have never liked others telling them what to do. They made that clear last year when California tried -- for the second time -- to implement a law requiring more disclosure.

All three major PBMs zipped off letters to California leaders arguing against passage of the bill. Essentially, they claimed the proposal would hurt PBMs and their customers alike.

"Envision, along with others -- including CalPERS (California Public Employees' Retirement System) -- supported the bill due to its disclosure model regulations and leveling the playing field for all PBMs who wish to participate in California business under the new requirements," says Envision CEO Kevin Nagle. But "ironically, while the Big Three embraced transparency and full disclosure publicly, their lobbyists and own organizations were fighting it behind the scenes vehemently."

Both California houses passed the measure anyway, but Gov. Arnold Schwarzenegger -- widely considered a friend to pharmaceutical interests -- vetoed it.

Maine has fared better. In a hard-fought legal battle, the state last year won the right to implement a particularly tough PBM law that goes so far as to declare the companies "fiduciaries" that must place their clients' interests ahead of their own. Former Maine Sen. Sharon Treat, who sponsored that law, is now working with more than a dozen other states that hope to pass similar legislation going forward.

In the meantime, she suspects, PBM clients could start making more and more demands of their own.

"There's no reason why they can't set standards within their own contracts -- if they know what to put in there," Treat says. "That seems to be the big problem."

Thus, some people feel, PBM clients could increasingly turn to transparent options instead. Envision, for one, sees more business coming its way.

"We had a terrific year (in 2005)," Nagle says. "And we think that 2006 will be even better. ... We're in the middle of a (PBM) revolution -- whether people want to believe it or not."