Musto: For Delawareans, PBM reform is a necessity
Kevin J. Musto is the owner of Atlantic Apothecary in Smyrna and Camden.
Practicing as an independent pharmacist in Smyrna and Camden has given me great insight into the problem of prescription drug prices. Daily, the patients I care for are facing higher out-of-pocket costs that are a cause for concern and bring into question their continued ability to afford the lifesaving medications they need.
The reality is that I have no impact on prescription prices or drugs on patient’s preferred formularies. In the profession of pharmacy, it is health insurance companies and their pharmacy benefit managers who hold the real power over the prices patients pay and if medication is considered formulary. As Congress looks at future reforms to bring down drug prices for all Americans, I believe PBMs are where senators and representatives should focus their attention.
Most patients have likely never heard of pharmacy benefit managers, but there is no entity with more control of the prescription drug market. They are the middlemen in the prescription drug trade, and they work on behalf of health insurance companies to manage prescription drug claims, negotiate with drug manufacturers on prices insurers pay, set retail prices for patient copays and create formularies detailing what drugs insurers will cover.
The largest PBMs are rife with conflicts of interest. The three largest (OptumRX, Evernorth and CVS Caremark) are all vertically integrated in publicly traded health conglomerates, which include insurers. The biggest of these is OptumRX, an arm of UnitedHealth Group, which also owns UnitedHealthcare. This conglomerate is one of the five largest companies in the world.
Profits at those three managers have more than tripled in recent years. Their huge growth should have policymakers questioning if the purpose of these drug market middlemen is to provide patient care or to grow profits for their parent companies. From my view behind the pharmacy counter, it seems they are increasingly prioritizing profits over patient care.
Here are three ways PBMs prioritize their corporate parents over consumers:
They negotiate rebates and discounts directly with drug manufacturers that lower the price their sister insurance companies pay for prescription drugs. This negotiated price is known as the “net price.” Instead of sharing the savings with patients, PBMs turn around and offer the same prescriptions to patients at the prerebate price. In recent years, drug manufacturers nationwide have lowered their net prices, and if prices have risen, they have only risen by 1% annually. Companies like Novo Nordisk, which makes drugs such as Ozempic and Wegovy, have lowered their list prices, so why aren’t these falling costs making it to patients? Pharmacy benefit managers’ skyrocketing profits could be part of the answer.
PBMs are also earning enormous profits off manufacturer fees and rebates in ways that hurt patients. These fees and rebates are tied directly to the list price of drugs and incentivize the managers to only keep high-cost medicine on their formularies, when significantly less expensive medications are available. When patients wonder why a more cost-effective alternative to a drug isn’t covered by their insurer, the answer is likely because the lower-cost alternative pays the PBM less and does not rebate like the branded medications.
Lastly, pharmacy benefit managers are increasingly eliminating pharmacy choice and are a direct threat to independent pharmacies like my own. The big three PBMs control 80% of the market. They use this power to force patients to fill prescriptions at certain pharmacies in a practice known as “patient steering.” Like rebates and fees, the managers do not seem to care what is best for patients when it comes to picking up their prescriptions. They just want to maximize how much they make on drug transactions.
Delawareans are fortunate that U.S. Sens. Tom Carper and Chris Coons, both Democrats, have out-of-pocket drug costs on their radar, including through Sen. Carper’s bipartisan PBM oversight act. Adding transparency and better oversight of these practices is a good start, but greater reform is needed.
Pharmacy benefit managers need to be held accountable and to be transparent. This includes requiring them to tie copays to the net prices they pay, to delink fees and rebates from drug prices, and to end the practice of patient steering. Right now, PBMs too often put profits over patients. It is time that our leaders in Washington work to change that and help make medications accessible and affordable.
Reader reactions, pro or con, are welcomed at civiltalk@iniusa.org.
