But a growing chorus of reform advocates is calling on plan sponsors to stop relying on legislative solutions that may never happen. Instead, they are encouraging employers to rise up and fight their own battles with the drugmakers, distributors and pharmacy benefit managers. Federal reforms will never "fix" the flaws of the pharmaceutical drug system; instead, sponsors need to flex their clout, and begin to take full advantage of the power they already possess.

"Federal legislation is a sledgehammer; it applies to everyone. Sometimes that's good and sometimes not," says Allison DePaoli, founder, Altiqe, a benefits advisory firm. "Drug pricing transparency is a complex issue, and the feds are incapable of managing such complexity for 300 million people. But employers today can manage their drug costs. Is the solution easy? Is it perfect? No. But it can be done."

Four presidents, no true reform

The history of drug pricing reform fails to inspire confidence among plan sponsors. Despite ongoing efforts by Congress to drive cost transparency and predictability, no true reforms have occurred during the last four presidential administrations. The current battle could be labeled "old wine in new bottles," as powerful Big Pharma lobbyists shift the focus from true transparency and reform toward concessions limited to Medicare and Medicaid programs.

The latest reform vehicle, H.R. 3 (the Elijah Cummings Lower Drug Costs Now Act), would allow the government to set prices for prescription drugs under Medicare Part D. The rationale behind the bill: It would offer flexibility to Medicare in negotiating drug prices with the industry, with a 10-year savings estimated at $581 billion.

Lobbyists for major employers are seeking to extend Medicare's negotiated prices to the commercial health plan sector. But as Congress struggles to produce a compromise bill that can make it to the White House, plan sponsor gains are again being eroded. Not only may the big prize—making Medicare negotiated drug prices available to commercial plan sponsors—be lost, but other smaller wins might be left behind, as well.

For example, language that would have required pharmacy benefit managers to disclose their pricing strategies so that plan sponsors could report their costs to the feds disappeared from the bill in the waning hours of 2020. As the legislation now stands, it still requires employers to report their plan costs, but there's no longer any force of law requiring the PBMs to disclose the needed information to plan sponsors.

H.R. 3 proponents "tried to tell us that PBMs will de facto have to provide the information to sponsors," says Shawn Gremminger, director of health policy for Purchaser Business Group on Health. "Have they met these people?"

Gremminger says that the bill's few remaining crumbs for businesses could ultimately be offset by the same PBMs the legislation once targeted for reform.

"We worry that, as structured, the bill could leave open the possibility for PBMs to swallow a lot of the projected savings," he says. "There's disagreement about how worried we should be about it. Just because we may see some average manufacturer price (AMP) lowering does not mean PBMs won't find a way to eat up the savings."

Strength in numbers

Gremminger's organization is among those created by and for employer plan sponsors to address the twin evils of rising costs and lack of transparency. The Purchaser Business Group on Health has a lobbying arm led by Gremminger, but also offers resources to its members designed to help them discover the true costs of the plan elements they pay for.

For instance, the group has developed template language to be included in contracts with PBMs that calls out their fiduciary responsibility to plan members. (Lack of aligned interests is a major conflict of interest concern that sponsors have about PBMs, brokers and the insurers themselves.) Gremminger says if members insist upon including such language in PBM contracts, they eventually should be able to force PBMs to shift their allegiance to their plan clients.

But case studies already exist that plan sponsors can learn from. Bob McCollins, chief sales and marketing officer at Pulse Health Solutions, advises a 13-member employer coalition in Fort Smith, Arkansas, that launched its own PBM in 2011. (Pulse Health Solutions offers pharmacy strategies for benefits advisors.) Over time, the coalition has seen its per member monthly prescription drug cost dip to $50. That's compared to anywhere from $115 to $130 monthly per member cost for those served by the Big Three (CVS, Express Scripts, OptumRX), McCollins says.

"By forming their own PBM, they directly addressed that misalignment of incentives," he says. "There are others who have figured this out. They started asking the right questions, educating themselves, and took control."

McCollins' take on H.R. 3? Forget about it.

"Is the federal government going to fix this? No, they're not. They tried to address hospital price transparency, but the result is that less than 10% are compliant. A $300 a day fine? Big deal. Will they say the same thing with drug transparency? Probably. There are just too many special interests involved to expect the feds to provide any sort of significant impact on drug pricing for the entire population," he says.

"Will they do something to help Medicare and Medicaid? Probably, because that benefits the government. But when they squeeze that balloon, the cost just goes to the consumer markets. The people who have to fix it are the payers of the health care dollars—the employer who is footing that bill."

McCollins is newly elected to the board of governors of the National Alliance of Healthcare Purchaser Coalitions, which claims 43 employer coalition members representing 12,000 employers, 45 million lives covered and $300 billion in health care spending. With those kinds of numbers, McCollins says, educating U.S. plan sponsors will soon take a leap forward. And they won't be looking to Washington, D.C., to lower their health care cost burden.

Reform is inevitable, but until then…

The pressure from so many sides to pierce the drug price transparency veil will eventually lead to some compromise at the federal level, sources interviewed for this article agree. But some express concern that if we don't make progress this year, it could be some time before Congress has the stomach to take on Big Pharma again.

The good news is that all the tools exist to make improvements today, especially for self-funded plans. And as more employers, large and small, realize self-funding is not just for major employers, the ranks of those who can take control of drug costs are rapidly expanding. "Employers have the power to change the health care landscape. However, most lack the backbone to do so out of fear of disruption," says Dave Chase, co-founder of Health Rosetta.

Chase ticks off three agenda items employers need to adopt:

• Educate themselves. Learn "the general accounting principles of the health care industry, using line item evaluation of all pricing elements."
• Understand their options. "There are many community-based options that are very impactful to reduce and better align the role of the buyer of care."
• Aggressively use the RFP process. Employers must learn that it is up to them, or their representatives, "to negotiate these better options and to also evolve them to become better and better over time. Leverage is key. Without this, the employer will struggle to affect change."

"At some point, there has to be reform," Chase says. "In the interim, strict clinical protocols for formulary, step edits, prior authorizations, quantity limits and the like are what we have. Aggressively negotiated rebates should also be followed, without giving up the clinical regimen of formulary. Finally, some of the coupon strategies of today, while somewhat funny money, can achieve focused results."

It's either go down the hard road to take back control of the health plan, or wait for help from Congress that may never truly address the cost issue. Surgical knife or sledgehammer—that's the employers' choice.

Read more: 

• HHS unveils plan to directly negotiate Medicare pharmaceutical prices
• Legislation to control drug prices advances from committee to full Senate
• Bringing down drug prices: States target PBMs