Healthcare Reform - Middleman In The Way

January 25, 2023

Jan 25, 2023

Good Day Healthcare Advocates

Every day we advocate for better healthcare for all of us is a good day. Thank you also to all of you advocates who have recently subscribed and to those who have asked for particular topics (use the comment button below). Some of the topics in work are the middlemen benefit managers and rural healthcare. Thank you.

Mission

The Healthcare delivery system in the United States is a patchwork that leaves much to be desired. It is the most expensive system among the top 35 industrial countries and covers far fewer participants delivering lower levels of quality care than many of our peer nations. This blog will provide:

Current problems in healthcare
Actions you can take
References

Current State of Affairs - Middlemen In the Way

Sometimes when you aren’t the best person to do the job, you hire someone who is. Your efficiency is increased, the job gets done better and everyone is happy. A long time ago I learned that was the case with painting and me. It looked so easy, I decided to paint the house. I took a week off of work, painted the house, made quite a mess, and had to hire someone, in the end to clean up the mess I made. It would have been more efficient for me to hire the painter and be done,

Pharmacy benefit managers started off like that in the 1960s. Health insurance companies would hire experts to manage the prescription part of the insurance. They would build a list of drugs that were covered under the plan (formulary), make sure the pharmacy got the drug to the patient. The pharmacy collects the patient’s copay to give to the PBM who may give some of it to the insurance company.. The PBM passess the reimbursement for the drug from the health insurer to the pharmacy. It sounds pretty simple. But when profit is the motive, not healthcare, greed gets in the way.

Today, about 85% of all insurance claims for prescriptions go through 3 companies. CVS Caremark, OptumRX, and Express Scripts. Not a monopoly but pretty close.

PBMs found that they could get kickbacks from drug companies for listing their drugs on formularies. That way more people would buy the drugs. PBMs found that they could also negotiate reimbursement rates to pharmacies. If the pharmacy doesn’t like the amount of the reimbursement, they don’t have to deal with that PBM and their insureds. And their business may suffer since all the people with that company’s health insurance will go elsewhere.

PBMs also engage in spread pricing where they charge insurance companies and patients far more than the cost to reimburse the pharmacist and keep the difference. The stick they have is that if you don’t accept our terms, our patients will go somewhere else.

Here is a cool video (PBS News Hour) that discusses the scheme as well.

The PBMs even had non disclosure agreements in their contracts saying that the pharmacist could not offer advice to patients that there may be less expensive ways to buy the drug, like without insurance. (Thankfully, there was federal legislation to make those clauses illegal). BUT the pharmacist is busy and often they don’t offer the cheaper alternative unless you ask.

HINT - Always ask what the cheapest way is to buy the drug. There are discount systems like GOODRX that may be lower.

Here is a bandaid that is in the senate. S 4293 (Cantwell, Grassley). It outlaws spread pricing, tries to force PBMs to surrender kickbacks to insurance companies and if they are lucky the patients, and make their business practices More transparent. Here is the bill in congress https://www.congress.gov/bill/117th-congress/senate-bill/4293 and here is Senator Grassley’s page on the bill and it has a one page summary link you can download.

It is not as good as it could have been - forcing rebates back to patients would be ideal, this one seems to pass them mostly to insurance companies. It’s just a bandaid and patients will still have pharmacies they can’t go to and will still be forced to pay more than they need to.

Of course, if insurance were non-profit, if everyone didn’t have their hand in the till, if everyone were looking out for the patient, What a wonderful world that would be. But here we are. We can tell our senators to cosponsor and support S 4293 to reform pharmacy benefit managers as a start. Let’s start.

What You Can Do - Contact Legislators with RESISTBOT

Text SIGN PFPYHD to 50409 to send the letter below to your state representatives and senators.

Three pharmacy benefit managers, CVS Caremark, OptumRx, and ExpressScripts, are handling about 85% of the insured prescriptions in this country. They engage in underhanded business practices like taking kickbacks to cover some drugs rather than others, and spread pricing to cheat pharmacies and those with insurance.

What I really want is Universal Healthcare but until we get there I want you to support legislation that fixes this. S 4293 (Cantwell, Grassley) The Pharmacy Benefit Manager Transparency Act of 2022 tried to fix this but its language was changed so that kickbacks and rebates can go to insurance companies and patients still pay more. You represent me, please fix these shoddy underhanded business practices now.