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1 AMERICAN MEDICAL ASSOCIATION HOUSE OF DELEGATES 2 3 4 Resolution: 228 5 (A-09) 6 7Introduced by: New York Delegation 8 9Subject: Inappropriate Incentives for Recommending Generic Drugs Over Brand 10 Name Drugs and Greater Transparency with Primary Benefit Management 11 Plans 12 13Referred to: Reference Committee B 14 (Monica C. Wehby, MD, Chair) 15 16 17Whereas, In an effort to promote the use of generic medications, there is specific regulatory 18language that requires pharmacists to disclose the lowest priced drug alternatives; and 19 20Whereas, If a generic is written on a script and DAW (Dispense As Written) is not indicated, a 21pharmacist does not have to identify the brand name drug; and 22 23Whereas, With the implementation of Medicare Part D, PDPs and MAPDs in their contracts with 24pharmacies, can offer incentives to increase generic utilization; and 25 26Whereas, Since PDPs and MAPDs are rewarded for focusing on low cost drugs for 27beneficiaries, while physicians are concerned more about quality of care and appropriate 28medications (taking into consideration patient’s history and current illness), there appears to be 29a disconnect between their overall goals--one financial, the other patient-driven; and 30 31Whereas, There appears to be a lack of understanding by beneficiaries enrolled in Part D drug 32plans as to the financial incentives provided to pharmacists for “pushing” generics over brand 33name drugs; and 34 35Whereas, Many pharmacy benefit plans receive “rebates” from pharmaceutical companies to 36increase sales for profitable products, which in turn raises the cost of drugs to consumers; and 37 38Whereas, Pharmacy Benefit Management (PBM) plans profit by retaining some or all of these 39rebates instead of passing these savings onto health plans, which in turn can be passed onto 40consumers; and 41 42Whereas, MedCo Managed Care, while under the ownership of Merck, was paid more than $3.5 43billion in rebates between 1997-1999, the majority of which was not passed through to customer 44health plans or consumers; and 45 46Whereas, In 2004, the New York Attorney General Eliot Spitzer filed suit against Express Script 47alleging that the PBM pocketed as much as $100 million in drug rebates; and 48 49Whereas, In 2003, Maine passed the first transparency law (upheld in 2005 by the U.S. Court of 50Appeals for the First Circuit) which allowed the state to regulate the practice of PBMs by 51imposing contract transparency and conflict of interest requirements and requiring that savings, 52based on volume discounts, be passed through to client health plans and consumers; therefore 53be it

1 Resolution: 228 (A-09) 2 Page 2 3 4 1RESOLVED, That our American Medical Association call upon the Centers for Medicare & 2Medicaid Services to abolish the provision of providing incentives for pharmacists to “push” 3generic drugs over brand name drugs (Directive to Take Action); and be it further 4 5RESOLVED, That our AMA urge the Centers for Medicare & Medicaid Services to assure that 6there be greater transparency between the use of generics vs. brand name medications so as to 7enable patients to make informed and intelligent decision (Directive to Take Action); and be it 8further 9 10RESOLVED, That our AMA seek passage of legislation similar to that passed in Maine in 2003 11and, subsequently, in other states, that would allow for the regulation of Pharmacy Benefit 12Management plans by imposing contract transparency and conflict of interest requirements and 13would require that savings based on drug volume discounts be passed on to client health plans 14and consumers. (Directive to Take Action) 15 16Fiscal Note: Implement accordingly at estimated staff cost of $6,000. 17 18Received: 05/14/09