The PBM-Insurer Mafia Comes for Community Pharmacies

[Celerity]

https://prospect.org/health/2024-03-21-pbm-insurer-mafia-community-pharmacies/



Pharmacy benefit managers (PBMs) are the shadowy middlemen who decide what drugs you can buy, where you can buy them, and at what cost—without disclosing how much they charge to your employer, to your doctor, or your pharmacist. And as HEALTH CARE un-covered has reported, the biggest PBMs are now owned by Big Insurance. PBMs are a poorly understood component of America’s permanent and escalating health care snafu, but they are a growing presence in our lives. Their business practices have created administrative and financial barriers to the prescription drugs patients need, even as PBMs’ Big Insurance owners rake in record profits.

A new Biden administration rule may rein in some of the worst practices of PBMs. But in response—and to protect profit margins—the PBM/Insurance industry, led by UnitedHealth’s Optum, Cigna’s Express Scripts, and CVS’s Caremark, has launched a full-on onslaught against independent pharmacies by dropping reimbursement rates. Many independents are being forced out of business. With them out of the picture, the PBMs will be better able to steer patients to their own pharmacies, mail-order operations, and, at least in Cigna’s case, big investor-owned corporations like Walgreens that they’ve struck deals with. Last year, Republican Ohio Attorney General Dave Yost said that “PBMs are modern gangsters,” and that “they were designed to protect and negotiate on behalf of employers and consumers after Big Pharma was criticized for overpricing medications, but instead they have absolutely destroyed transparency, scheming in the shadows to control drug prices on all sides of the market.”



By pursuing practices that drive independent pharmacies out of business, the big insurers can make drug prices even more opaque, resulting in higher costs to ordinary Americans—and monopolizing the pharmacy market in the same way that they have already monopolized pharmacy benefits. In just the past year, more than 300 independent pharmacies have closed. (The last independent pharmacy in my town of Brattleboro, Vermont, closed in January 2023, blaming “chaos and quirkiness of the pharmaceutical world.”) Meanwhile, PBMs are contributing more and more to revenue and profits at UnitedHealth, Cigna, and CVS, which collectively control 80% of the PBM market. The total pharmacy spending controlled by UnitedHealth’s OptumRx, for example, grew by nearly 30% in a single year to $159 billion, the company recently reported. Cigna’s Evernorth saw a 9% growth. CVS does not report its Caremark revenues separately, but CVS enjoyed a 73% overall growth in operating income in 2023. Among the three, they spent $12 billion buying back their stock in 2023.

Denise Conway owns an independent pharmacy in Ohio. She points out one of the key benefits of independent pharmacies: the human touch that they have with patients, as opposed to a faceless corporate overlord. “Independent pharmacies have an ability to answer the phone,” said Conway. “Our phone rings nonstop because we physically answer the phone. We have someone to talk to face-to-face and person-to-person. Independent pharmacies have charge accounts, people don’t have to pay right away if they don’t have the cash on hand.” At mail-order and chain pharmacies, Conway pointed out, “People have to wait hours, days, and weeks to get medication filled. If you’re waiting days or weeks you are in a life and death situation. If we can’t fill a prescription quickly, we are on the phone with that patient to ask them if we should transfer it somewhere else, knowing that everything we touch is a person’s life,” she said.

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related

https://wendellpotter.substack.com/p/nearly-half-of-every-dollar-spent



As members of Congress get back to business after the holidays, they seem to be poised to pass legislation that would address some of the abuses of pharmacy benefit managers (PBMs), the middlemen who extract so much money from the pharmaceutical supply chain. Recent research adds more urgency to the need to rein those companies in. And it’s important to point out that the three biggest PBMs, all of which are owned by big for-profit insurance companies, control 80% of the market. That’s far more concentration than in the pharmaceutical industry, as you’ll see below.

As Ge Bai, Ph.D., CPA, professor of health policy and management at Johns Hopkins Bloomberg School of Public Health and professor of accounting at Johns Hopkins Carey Business School, explained in a recent episode of the excellent Relentless Health Value podcast, PBMs take far more money out of the supply chain than any other entity, including the drug makers. Bai told podcast host Stacey Richter that researchers at Hopkins and the University of Utah looked at the 45 most commonly used generic medications taken by patients enrolled in a Medicare Part D pharmacy plan in 2021. They found that for every $100 spent by the Part D plans, $41 went to the PBMs, $30 to the manufacturers, $17 to the pharmacies that dispense the drugs, and $12 to the wholesalers.



In other words, more than half of every dollar paid by Part D plans went to intermediaries (middlemen), and many of those middlemen–the big insurers that own the big PBMs–also operate Part D plans. In fact, as the researchers noted in an October 2023 article in JAMA: “All but 29.9% of Medicare Part D dollars spent on 45 high-utilization generic drugs went to intermediary gross profit.” And then there is this: Those insurers/PBMs make Part D enrollees pay varying amounts of money out of their own pockets–in some cases significant amounts–before their Part D plans will pay a dime.

No wonder so many people on Medicare walk away from the pharmacy counter without their medications because of what they have to shell out. It’s money many of them simply do not have. They’re seniors and disabled people, and many if not most have little or no income besides their Social Security checks. As Bai and Richter point out, 90% of the medications Americans take are generics, which are far cheaper than brand-name drugs. And Bai says generics should be cheaper in America than in other countries. Manufacturers, she explains, “get, in general, lower revenue in the United States for generic drugs than from other countries. We have very affordable generic drugs then from the manufacturer’s perspective, but probably not from the patient’s perspective.”

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[Lonestarblue]

1. Such an important topic. Thank you for posting.

In 2022, the per capita spending by the US on healthcare was $12,555. The next closest countries were Switzerland at $8,049 and Germany at $8,011. Both Switzerland and Germany offer all citizens far better healthcare than we have in the US where millions of people have no primary care doctor and no access to healthcare other than an expensive emergency room. The added $4,500 we spend per person and probably quite a bit more goes to the profits of big corporations. I’m retired and wonder if Medicare and decent healthcare will even be available at an affordable cost in a few years. I have original Medicare, but I think the Medicare Advantage plans will eventually take most of the Medicare market, at which point they can raise rates to whatever they want.

We need universal healthcare and more government control of drug and insurance companies. And get private equity out of any aspect of healthcare.

[bluesbassman]

2. This is a huge issue that has gotten little attention in the media.

The Big Pharmaceutical Companies catch a lot of blame, and some deservedly so, for the high cost of drugs, but these PBMs add nothing to the availability, quality, or efficiency of getting needed medicines to patients, yet they constitute a significant portion of the end users cost.