Editor’s note: This commentary is by Jeff Hochberg, who is president of the Vermont Retail Drug Association, a pharmacy lobbying and action group whose members are mostly owners of independent pharmacies in Vermont.
[C]oming up with ways to keep prescription medicines affordable and accessible is a priority of our lawmakers this session. They’re looking at several ways to control costs, from importing drugs from Canada, to holding drug manufacturers’ feet to the fire. But the truth is, they are looking in the wrong directions. What they should be looking at is the relationship between health insurers and the pharmacy benefit managers who work with them.
Contrary to popular belief, neither the pharmacist nor the drug manufacturers are responsible for setting the price you pay when you pick up your prescriptions. That responsibility rests with the pharmacy benefit managers, and because they’re mostly unregulated, they’ve amassed an enormous amount of power as their operations have flown beneath the radar. I’m sure they’d like to keep it that way.
So, it’s up to lawmakers to take action and they have an obligation to their constituents to take a deep dive into pharmacy benefit managers before they enact any policy. If they do, what they’ll find is pretty astonishing: not only do they charge the insurers more than they reimburse pharmacies, but often charge consumers more for their prescription drugs as opposed to if they paid out of their own pockets. That’s right. Pharmacy benefit managers and health insurers don’t always work in the best interest of patients. Shocking as that sounds, since we pay our premiums in order to be covered, it’s the truth.
Here’s how it works. Your pharmacy charges you $20 for a prescription. The pharmacy benefit manager charges the pharmacy $12 for that prescription and then pockets the rest of the change — $8. It’s called a “clawback.” Not only are you paying more for the drug than you ought to, but you are paying for your insurance provider who pays that pharmacy benefit manager to manage your prescription coverage.
The worst part is that your pharmacist isn’t allowed to tell you that paying out of pocket might be cheaper. Pharmacy benefit managers force pharmacists to sign contracts with gag clauses in them. If they violate it, they may face serious reprisal.
In 2014 Vermont lawmakers passed a bill that included forbidding pharmacy benefit managers from using these clawback strategies. But the reality is, it’s still happening. Our pharmacy owners are inundated with hundreds of cases of these clawbacks. We have mountains of paperwork to prove it.
There are multiple ways pharmacy benefit managers impact what patients pay for their health care, including a more recent announcement that they will no longer count copay assistance cards towards a consumer’s deductible. Patients with chronic diseases such as cancer, MS, arthritis, hemophilia and many others, rely on these cards, offered by drug manufacturers, to offset the cost of therapies that can be expensive. So, to have this assistance disappear, puts patients in more of a financial bind.
How did we ever find ourselves in this situation?
In the late ’80s pharmacy benefit managers first came into the picture, emerging as real-time internet claims processors. At the time this was ground-breaking and even today remains light speeds faster than any other medical claims processing. However, the internet is no longer novel and web-based platforms are more required than praised. So, what else do the pharmacy benefit managers offer?
Pharmacy benefit managers negotiate steep discounts from drug manufacturers (sometimes as much as 55 percent off the cost of the drug). They then tell the insurers which drugs to cover for patients. But guess who’s not reaping any of those savings? You got it: patients!
Pharmacy benefit managers have positioned themselves to be the most influential component to our health care system. We’ve been focused so intently on the manufacturers that we’ve overlooked these middle players and their role has grown exponentially.
Before lawmakers take any action, they need to ask themselves these questions: “Is there any entity within the health care system that add costs without providing any real service?” and “Why is the pharmacy financial model so removed from the distribution channel?”
