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A reckoning is coming for PBMs

Earlier this month, a Medicare recipient with drug coverage filled a prescription at a Concord branch of a major pharmacy chain. The pharmacist, one of many with heart, soul and concern for customers, ran the numbers and pointed out that it would be $80 cheaper if the patient paid for the drug out-of-pocket instead of using her insurance co-pay.

Until recently, pharmacists were banned from alerting customers to such savings by contracts with pharmacy benefit management companies. Untold millions were secretly siphoned away from unwitting patients by the legal, but deceitful, tactic.

A bill passed by Congress last year freed pharmacies from PBM gag orders.

“Multiple reports have exposed how this egregious practice has harmed consumers, such as one customer who used his insurance to pay $129 for a drug when he could have paid $18 out of pocket,” Sen. Susan Collins of Maine, a sponsor of the bill, told colleagues.

Now several states, including Ohio, have gone to court to recover money needlessly paid to PBMs, who kept the bulk of the money spent by customers its contracts kept in the dark. A study of 9.5 million prescription drug claims by researchers at the University of Southern California found that “2.2 million – or 23 percent – overpaid for their prescription because their co-pay was more than the cost of the drug.”

“Clawbacks” earned by overcharging patients are just one of the sins of an industry that evolved in the 1990s as middlemen between pharmaceutical manufacturers, insurers, employers and plan beneficiaries. They have become, it seems, akin to lampreys, the parasitic eel-like fish with rasping mouths that attach to their piscine victims and suck their blood, weakening but not killing them.

It’s long past time for pharmacy management companies like CVS Caremark, Express Scripts and OptumRx to justify their existence. A significant percentage of the health care industry say they offer no benefit at all to patients or health care providers. We agree and believe that if light is shed on the financial machinations of the industry it will become clear that PBMs add no value to the world’s most expensive health care system.

At the national level, and in state after state, a reckoning is coming.

In New Hampshire, the effort has taken the form of the PBM Accountability Project. The bipartisan group includes Concord Mayor Jim Bouley, Franklin Mayor Tony Giunta, representatives of the state’s unions, health care advocacy organizations, municipal governments, think tanks, taxpayer groups and employers.

One of the project’s first tasks is to determine whether, like New Jersey, New Hampshire should adopt a reverse-auction model for contracts with pharmacy management firms. Under that model, states, or presumably smaller entities that provide benefits, not insurers or PBMs, create a drug formulary that must be covered, and PBM management companies bid to administer the drug plan. Presumably, competition will result in lower prices, though with only three major players we aren’t optimistic.

Spokespeople for New Hampshire’s accountability project claim the change could save the state $10 million per year under its contract with the PBM ExpressScripts.

We support the PBM Project’s quest for transparency and all efforts to end profiteering and price gouging by every component of America’s needlessly expensive health care system.



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