Just when you thought your doctor was in charge of your care; confident that this professional has your well being at the center of his/her decision-making, your world comes crashing down. You walk into the pharmacy to pick up your medication, the answer to your medical condition, only to find that the drug is not on the formulary. What does that mean? It means that your medication was not “chosen” by the pharmacy benefit manager (PBM) contracted with your health plan. That anticipated $10 co pay has turned into $600 per month. The pharmacy calls your doctor but there is no generic equivalent and none of the other medications in the class are appropriate for you. How can this happen? In the United States? To a patient with insurance? Allegedly good insurance?
Pharmacy benefit managers—often referred to as PBMs—are third-party entities that insurance companies hire to manage the prescription-drug benefit portion of their plans. These companies operate largely behind the scenes with little oversight and, while they are supposed to bring down the price of medications for individuals, PBMs may actually be raising prices and adding costs to the health care system, not to mention the additional work effort they require to get patients their needed medications.
This story (above) happens thousands of times every day – people remain sick because they cannot afford their medications. A third world, top dow, pay-for-play scenario lives subversively and unregulated in the heart of the American health care system. As in many third world countries, there is no transparent marketplace but instead there are self-serving interests interfering and looting the market; robbing America’s patients. Don’t blame the pharmaceutical companies -this problem lies with the interlopers, the pharmacy benefit managers (PBM’s)
Across our country, over 250 million people have their coverage of prescription medications controlled by PBMs—among the biggest are Express Scripts and CVS Health. Express Scripts documents revenue in 2015 at $150 billion dollars, money extracted from our healthcare system without much benefit to the patient to show for that money unless you call excessive paper work they require in their obstructive processes a benefit.
For instance, the PBM’s often demand physicians fill out lengthy forms and/or wait on the phone (on hold) for hours to bargain for authorizations to get our patients’ medications “covered.” We never speak or deal with with a medical professional. There is, in fact, NO pharmacist on staff (or so I am told repeatedly). The only medical professional of record is Patricia Bates, PharmD, who signs the denial letters but is never available to talk. No one seems to know exactly who she is or where to find her. I pursued this phantom over months and finally found her in Phoenix, Arizona. She stated she served only as a signatory.
Another example of obstruction is the process called “step care” or more properly “how to delay my patient getting the proper medication until I jump thru a requisite number of hoops”. This is as insidious as it is harmful. This process can require up to a year to accomplish. Time and money is wasted and our patients are not getting the proper and timely treatment.
PBM’s determine which drugs a health plan will cover. They negotiate directly with pharmaceutical companies over the cost of the drugs. While one of the main purposes of PBMs is to leverage the number of people they represent for lower prices from drug makers, because there is no transparency, it is unclear whether they save insurance carriers (and ultimately patients) any money at all. Even if they do, whether they actually pass on those savings to America’s patients is an open question. In fact, in some cases PBMs even charge insurance companies more for contracts that disclose information on how much money they are pocketing for themselves. Further, the health plans can financially punish your pharmacist if he/she offers you a cash price that would save you money. That’s called “claw-back.”
This market is made of monopolies that enable them to “manage the market” to their benefit by directing all phases of pharmaceutical “sales” – formulary development; negotiated fees from both payer, vendor and producer; bonus guarantees based on projections founded on data owned by the PBM leading to substantial rebates from producers. Any monopoly that is unregulated while managing (manipulating) a market precludes a market based price and payment mechanism. The PBM owning the rights to all pharmacy eligibility enables them potentially to direct certain products to the population based on their drug use history and further “manage the market” to their benefit. This leads to price fixing, denial of patients right to proper treatment, stripping the professional expertise from the physician and disembodying the sacred patient/doctor relationship. The lack of transparency is a real problem because the decisions PBMs make about which medicines to cover, which to exclude, and how much to charge plan holders can have significant consequences on the well being of individuals across our country.
PBMs sometimes put their own bottom lines ahead of serving patients. PBMs can structure their contracts with health plans in a way so that higher drug prices improve their bottom line significantly. Some PBMs can also take payments from one drug maker and make the medications of the drug maker’s rival more expensive. This type of preferential coverage can limit treatments, often for important medicines, and ultimately harm those people who find it hard to afford the inflated price of the more expensive drug.
Five years ago, health plans, via their PBMs, covered most medications, with only a handful excluded from CVS Health and none from Express Scripts. Today, hundreds of medicines are not covered, including important treatments for prostate cancer, skin cancer, hepatitis C, diabetes, heart disease, and arthritis. The result is that patients who are facing some of the most challenging medical battles of their lives may not be armed with the medicines they need.
The problem has gotten so bad that pharmacists have started to raise their voices in concern. Many say that PBMs serve as unnecessary middlemen that does nothing more than inflate the cost of prescriptions drugs. Even some insurance companies—the very companies that hire PBMs—have had enough. Last March, the insurance company Anthem filed a $15 billion lawsuit against Express Scripts for allegedly overcharging.
Thankfully, some lawmakers in Sacramento, California have begun to take note. New legislation—Assembly Bill 315—would shine a light on the activities of PBMs. The bill would require that PBMs be licensed by the California State Board of Pharmacy and disclose their activities to the board. But, this is only a temporary fix. Ultimately, physicians must take the reigns and as the ultimate signatory and responsible party must be able to write an Rx with the expectation that it will be filled. And patients should know the price of the prescribed drug and the cost of alternatives.
AB315 is common-sense legislation that will bring much-needed transparency to part of the health care industry that operates largely in the shadows. But, in the end, if patients expect choice and a reasonable value based marketplace, this industry needs a more direct pharmaceutical to patient system perhaps Amazon.com/pharmacy. It’s time to clear the air, lower the costs of drugs, and get back to the business of saving lives. PBM’s need go away.