Look behind the pharmacy benefit manager curtain

You won’t like what you find there

SECRET TRANSACTIONS, billions of dollars involved, hidden tactics. Sounds like the next big movie mega hit. But it’s not.

It’s actually the world of pharmacy benefit managers, or PBMs. You might not have heard of them, but they know a lot about your health care coverage. In fact, they orchestrate which drugs you have access to and how much you pay.

Who are they and how did they get this  power? That’s exactly what federal and state lawmakers are now asking and PBMs don’t like it.

PBMs were supposed  to help health insurers file claims, maintain pharmacy networks, and negotiate discounts on medications. The idea was that those discounts would help lower costs for patients. But that never happened. In fact, costs increased.

Over the years, PBMs have amassed an enormous amount of power and they’ve consolidated that power with the acquisition of pharmacies. Working in tandem with insurers, they’ve been optimizing their profits making literally billions of dollars on the backs of patients.

The three largest PBMs—CVS Caremark, Optum Rx and Express Scripts—now control about 80 percent of the drug market. That equates to 4 out of every 5 prescriptions being controlled by those three PBMs. Additionally, they and insurers own retail pharmacies, mail order pharmacies, and specialty pharmacies and steer patients to them.

Because PBMs push patients to their own pharmacies, they have jeopardized the viability of independent pharmacists by reducing business and cutting reimbursement to levels that are Lookless than the cost to obtain the medication. Many of these pharmacies, which for many underserved populations are the only touchpoint of health care, have closed. It has caused pharmacy deserts in underserved and rural areas.

Originally promising to lower health care and drug costs, PBMs are finding themselves under scrutiny for things such as increasing costs, clawing back discounts, blocking copay assistance from counting towards a patient’s out-of-pocket costs, and charging states’ Medicaid programs significantly more than a medication costs —something the taxpayer is on the hook for.

It’s patients who suffer thanks to the games PBMs play. Research has shown PBMs are raising drug costs to the point where sometimes it’s cheaper to pay cash than to go through insurers. Research found in some cases that going through the insurer (and thus the PBM) increased drug costs by 21 percent. And for 1 in 4 prescriptions the copays were higher than the cost of the certain drugs.

How did things get so out of control? It’s simple. PBMs lack transparency and accountability and are unregulated. In fact, they are the only part of the health care distribution system that isn’t monitored.

This week the US Senate Committee on Health, Education, Labor & Pensions is considering legislation that would create new reporting requirements for health plans and PBMs and ban policies that put middlemen profits over patients. The Senate Finance Committee and the Federal Trade Commission are  also investigating the negative impact of these Goliath entities and the role PBMs play in raising drug costs. And in states across the country, including here in Massachusetts, there are bills pending that would look behind the PBM curtain.

Meet the Author

Todd Brown

Executive director, Massachusetts Independent Pharmacists Association
Unfortunately, the real victims in the PBM schemes, are patients who have seen their out-of-pocket costs skyrocket and access to medications restricted.

All this should serve as a clarion call for our lawmakers to act immediately to increase transparency and accountability around PBMs, regulate them, and protect their constituents.

Todd Brown is instructor emeritus at Northeastern University and the executive director of the Massachusetts Independent Pharmacists Association.