Pharmacy Benefit Mangers
Hi, thank you for coming back for the latest edition of Beyond Primary Care’s blog- pharmacy benefit managers. In Beyond Primary Care blogs we highlight healthcare news, advice for medical conditions, and how membership for care works! Beyond Primary Care is an insurance free, membership based family medicine clinic. Beyond Primary Care is the highest rated Direct Primary Care clinic serving patients in Ann Arbor and throughout Washtenaw, Livingston, and Wayne counties giving families and employers peace of mind about healthcare costs by providing affordable and accessible primary care services.
In this blog post, we want to educate our patients and any prospective patients about pharmacy benefit managers.
Why Prescription Drug Cost Is Important
Nearly half of the people in the United States take at least one prescription medication, and over 10% of us take five or more. We take medicines for asthma, ADHD, mental health disorders, infections, heart and lung problems, and more. Research shows that many health conditions have much better outcomes when prescription medicines are used (and used correctly). The bottom line? Using prescription medicine often keeps us healthier, more active, and living longer.
Research also shows that prescription drug cost plays an important role not only for the physician prescribing the medication, but also the patient’s compliance in taking the medication. Almost a third of patients either don’t fill the prescription at all, or don’t fill it regularly because of the cost. The result? Many people are denied the health benefits of prescriptions drugs because of their high cost.
Pharmacy Benefit Mangers
For a long time, the pharmacy that filled a prescription billed insurers directly. That was a time-consuming process and often prone to billing errors. As technology improved and people expected more from computer-driven transactions, a new system was developed. Pharmacy Benefits Managers (PBM) - different than PB&J, I’m glad you asked - found a way to process claims right at the point of sale.
Pharmacy benefit managers are essentially middlemen who negotiate with drug manufacturers on behalf of health insurers, large employers and others that contract them. PBMs are not separate insurance plans, and current examples of PBMs include but are not limited to Express Scripts, OptumRx, MedImpact, and Navitus. PBMs initially allowed for transactions to be quick and accurate, and the pharmacists knew what to charge the patients. PBMs provided a needed service for a small per-transaction fee. Another win-win!
PBM Formularies
The nature of how PBMs operate has changed radically over the years. After initial success helping pharmacies bill for prescriptions, they began controlling prescription costs limiting coverage to medications that were effective but less expensive. PBMs did this by making a list of “preferred medications” (also called a formulary). By putting medications on this formulary list, it increases the chances that patients will be prescribed those drugs. When patients purchase those medications at full price, the rebate goes to the middlemen (PBM), who share their earnings with the insurance companies that contracted them.
Lists of preferred medications originally were compiled based on effectiveness and cost of medicines. But the fact is that PBMs allow drug manufacturers to gain preferred status for their products by demanding rebates from them.
What are rebates in the real world? Kickbacks.
The PBM industry states that this practice results in decreased costs to insurers and patients, but the lack of transparency makes that hard to prove and it has became harder and harder for patients to get coverage for necessary medications that didn’t happen to be on the insurer’s formulary.
PBMs Hurt Pharmacies
A PBM’s network rate is generally far below the pharmacies usual and customary (U&C) list price- that is the prescription price that a pharmacy charges to a cash-paying customer. Even though the network rates may be lower than a pharmacies U&C rate, PBMs typically require pharmacies to accept the discount cards to remain in the PBM’s pharmacy network.
Not only that, but instead of a small, contracted per-transaction fee to pharmacies, PBMs now assess large and unpredictable fees. Because these fees are assessed months after a sale, pharmacies can’t predict at the point of sale whether it will result in a profit or a loss. Fees can also be charged when medications aren’t refilled on time, when a doctor prescribes a medication that the PBM feels isn’t ideal for the patient, and other situations pharmacies can’t control.
Big Industry Misses The Elephant In The Room
In the last few years, we have seen business entrepreneurs such as Mark Cuban open an online pharmacy to offer lower prescription medications. The pharmacy offers lots of medications, and by side-stepping those annoying PBMs, are generally able to offer generic drugs at wholesale prices. All they need is a valid prescription from your physician, your payment, and medications are shipped to you.
The problem though is that they are not necessarily solving anything about prescription drug prices- at all. Also, they are nothing more than another version of middlemen, a third party that takes days to weeks to obtain medications.
Lastly, impact is limited. At least for now, they can not solve the market-driving jaw-dropping prices of brand-name drugs. When Big Pharma secures a patent for a new medication, it prevents other companies from making or selling that same drug, but also allows the manufacture to sell that drug at whatever price they want.
It is true, brand-name drugs make up a smaller share of prescriptions than generic drugs. Yet, they account for nearly 80% of prescription drug expenses.
And the part that really gets under Mark Cuban’s skin, his on-line pharmacy does not have the volume to compete with insurers nationally where he can negotiate leverage with those manufactures on prices.
What to do?
Cut out the Middleman and join Beyond Primary Care. You can also check our the next blog about Paying Cash for Medications and suggestions about what patients can do to get the medications they need at affordable prices.
Thank you for reading
To make an appointment with Dr. Jeff O’Boyle please see our scheduling link.
Dr. Jeff O’Boyle with Beyond Primary Care
