Competitive Marketplace

The Academy of Managed Care Pharmacy (AMCP) believes that the U.S. health care delivery system benefits from a competitive marketplace and can provide greater value to patients and payers than a consolidated, government-run system. Policymakers should take reasonable steps to incentivize competition without implementing laws or regulations that may have an anti-competitive effect and therefore result in increased patient costs. Operating within a competitive marketplace environment, managed care organizations (MCOs) have been able to design effective health benefits programs that meet the needs of their patient populations. Through innovative and integrated strategies that focus on provider/patient education, quality assurance, and drug utilization management, managed care pharmacy has been able to deliver a comprehensive pharmacy benefit that is clinically sound, accessible, and affordable.   

The private health care marketplace delivers many valuable options to patients, small businesses, and payers. The establishment of vibrant state insurance purchasing exchanges under the Affordable Care Act has further sharpened competition as consumers and employers can more readily compare plans’ services and costs to find coverage that best fits their needs. For example, a patient may choose to become a member of a health maintenance organization (HMO) with a designated provider network offering a lower monthly premium and cost‐sharing structure or a preferred provider organization (PPO) with a larger provider network but a more expensive monthly premium and cost‐sharing structure. Similar to individuals, small business owners can receive flexible health insurance options through the Small Business Health Program (SHOP).  

In a competitive health care marketplace, purchasers (e.g., employers and individuals) naturally demand the highest quality health care at the most affordable price. This demand has led to continually improving quality standards, management of chronic conditions, and innovation in health care delivery. To further enhance competition, AMCP believes that the Medicare Part D program should create a core set of standardized pharmacy performance measures based on input from pharmacy stakeholders while also granting plan sponsors the ability to use additional measures that are reported to CMS.¹ 

The reporting of performance measures related to medication adherence has also improved an MCO’s ability to reduce racial health disparities and manage chronic conditions. Based on the Centers for Medicare and Medicaid Service’s 2021 National Impact Assessment of its quality measures, reporting these measures helped narrow disparities in medication adherence for Black, Hispanic, and low-income beneficiaries. The use of performance measures is also associated with improved adherence to specific drug classes that treat chronic illnesses, including heart disease, diabetes, and hypertension.²  

In the past, competition has pushed health plans and pharmacy benefit managers (PBMs) to develop utilization management and clinical evaluation tools such as tiered co-payments, prior authorization, and mail-order services. Over time, competition has continued to foster the adoption of increasingly innovative strategies by plans and PBMs. These newer tools include value-based contracting programs, affordability solutions geared towards certain critical medications, and advanced approaches to rebating and formulary management. Policies that disincentivize competition restrict the ability of plans, PBMs, and manufacturers to collaborate and innovate best practices concerning the pharmacy benefit. The development and use of these evidence‐based best practices by health plans and PBMs have improved the quality and safety of drug prescribing while preserving the clinician’s ability to make individual patient decisions.  

 Both federal and state law must support the nation’s health care system through appropriate regulatory oversight, which assures equal access, non‐discrimination, due process, and a standard of care while limiting fraud, waste, and abuse. Government agencies, such as the Federal Trade Commission (FTC), play a critical role in preserving competitiveness in the marketplace by stopping or preventing agreements between competitors (horizontal conduct) and monopolization (single firm conduct). The government can also establish market rules to promote competition, including those which remove barriers to the adoption of biosimilar and generic products, with the ultimate goal being to improve the transparency of, and increase accountability for drug prices, and reduce profit-seeking behaviors in the value chain while assuring continuous growth and improvement in health care coverage for patients. All of this requires a balance between a marketplace that allows for choice, flexibility, responsiveness, and innovation through competition and appropriate governmental regulation and oversight to protect consumers. An appropriate balance will ensure that patients and payers have access to a range of coverage options and can select the option that maximizes quality and value.  

When government regulation restricts competitive forces, the results include unintended consequences that can jeopardize patient safety, delay pharmaceutical innovation, reduce access to necessary care, and lead to higher costs. For example, government‐mandated formulary content may overlook concerns in safety profiles for certain therapeutic classes of drugs and lead to avoidable cost increases when plans are unable to take advantage of lower list prices or price concessions for therapeutically equivalent treatments. There are drugs approved by the Food and Drug Administration (FDA) that, while offering an increased therapeutic benefit for some patients, can expose others to unnecessarily increased risk of side effects and complications with no equivalent increased therapeutic benefit. In a competitive marketplace model, health plans use several tools to manage access to certain drugs, which have raised safety concerns among the health plan’s pharmacy and therapeutics committee.  

AMCP believes the competitive health care marketplace works by providing choice, access, and service to patients and payers while challenging the status‐quo of limited programs and inflexible options provided to others. This system has and will continue to improve the quality of health care and restrain the escalating costs of health care. AMCP will continue to work closely with government officials, agencies, and other payers to constantly refine the services and products sought through pharmacy benefits.  

See also:

AMCP Legislative and Regulatory Positions

Revised by the AMCP Board of Directors, October 2022

Revised by the AMCP Board of Directors, April 2014

Approved by the AMCP Board of Directors, February 2009 

¹ AMCP. “Pharmacy Performance Principles.” https://www.amcp.org/sites/default/files/2022-05/PayforPerformance_Apr2022.pdf. Published March 2022. Accessed July 22, 2022. 

² Centers for Medicare and Medicaid Services. “2021 National Impact Assessment of the Centers for Medicare & Medicaid Services (CMS) Quality Measures Report.” https://www.cms.gov/files/document/2021-national-impact-assessment-report.pdf. Published June 21, 2021. Accessed July 22, 2022.