From another site and perhaps a bit dense for this crowd, but...How little known Pharmacy Benefit Managers, owned by insurers including CVS and UnitedHealth, hurt the U.S. consumer.
Interesting to note that the U.S. is only country with these PBMs
Five Ways that Big PBMs Hurt U.S. HealthcareâAnd How We Can Fix It
By Mark Cuban, Co-founder, Mark Cuban Cost Plus Drug Company
Why does my companyâthe Mark Cuban Cost Plus Drugs Companyâexist?
In a drug channel dominated by three large pharmacy benefit managers (PBMs), how can a company launched in January 2022 be such a big part of the U.S. drug pricing conversation?
The answer is simple. The dominant three PBMs put stock price over health. Here are five of their greatest hits:
1. Zero transparency.
The number one rule when contracting with PBMs is that you donât talk about the PBMs and their contracts. They prevent everyoneâproviders, manufacturers, employers, and non-affiliated pharmaciesâfrom making public or discussing their pricing terms or any aspect of their contracts. If you do, theyâre happy to sue you.
2. Magic names and specialty pharmacies.
The PBMs have decided to take the drugs they can charge the most for and call them âspecial.â But thereâs nothing special about most of these drugs.
Many of these products are small molecule generic drugs. Thereâs nothing unique about the captive pharmacies they call special and force their customers to buy from. Weâve had patients tell us that they have been charged 100 times more for specialty drugs like Imatinib or Droxidopa than what they or their employers would pay on Cost Plus Drugs.
3. Rebate distortions.
I genuinely believe that CEOs do not understand how their healthcare costs work, particularly as it applies to the rebates they receive from their PBMs. They tend to look at rebates as cash paid by the drug manufacturers. Nothing could be further from the truth.
In reality, rebates are a way that PBMs destroy and distort employer plans at the expense of their employees. Thatâs because rebates are not paid by the drug manufacturers. They are paid by the companyâs sickest and oldest employees.
These rebates could be used to reduce the employee deductibles or to actually pay for the cost of medicines. Instead, the companies keep deductibles higher by forcing sick and older employees to pay more out of pocket, using after-tax dollars.
Because specialty drugs are expensive, employees are likely to reach their deductible capsâwhile still facing out-of-pocket monthly copays for chronic illness medications.
4. Allowing rebates to determine formularies.
Rebates are also the reason big PBMs restrict the medications they allow to be filled.
PBMS often only reimburse drugs with significant rebatesâand exclude drugs from the formulary that donât have rebates. Why leave out a Humira biosimilar like YUSIMRY that is available on Cost Plus Drugs for a true price of $594, when you can charge an employer more than $8,000 per month for Humira?
Formularies should not exist. Doctors should decide what patients need access to, not the PBMs.
5. Sâââing on independent pharmacies.
Sâââing is the appropriate word to describe the financial abuse that weâve heard about from non-captive pharmacies. I couldnât find a better word.
These pharmacies have zero leverage, so when the PBM says they must pay a direct and indirect remuneration (DIR) fee that is calculated on a whim by the PBM, they must pay the fee. If a PBM decides to audit a pharmacy, it can invent issues, knowing the pharmacy canât afford to fight.
I just talked to an independent pharmacist facing $200,000 in fines that is going to put them out of business. Another spoke publicly about how they were fined if a patient doesnât pick up their medications within 30 days.
But it gets worse. These pharmacies buy their brand medications from distributors for a set price. When a patient brings in a prescription covered by Medicare Advantage, traditional Medicare, or an employer plan, the PBM may not fully reimburse the pharmacy for that claim.
The pharmacy, after putting up cash for the inventory and taking sales risk, is expected to lose money on that script. What do you think weâd say about that on
Shark Tank? Itâs gotten so bad that the smaller pharmacies are transferring brand scripts to the biggest chainsâending long-term patient relationships, risking that patientâs health, and losing front-of-the-house sales.
HOW WE CAN FIX U.S. HEALTHCARE
I can go on and on about the big three PBMs. They are everything that is wrong with this industry.
Hereâs the crazy part: There is a fix.
The federal government, states, and self-insured employers can stop doing business with the big three PBMs. There is not a single thing that those big three PBMs do that is unique or canât be replaced by independent rebate-avoiding PBMs. State and federal agencies and big companies could switch out from those big PBMs and use their competitors. This would change an entire industry in less than five years.
Which brings us back to my original question: why is Cost Plus Drugs in business? Itâs simple as well.
Everything that I just described has killed the trust that this country has in our healthcare system. Nobody trusts anything beyond their own doctor.
At Cost Plus Drugs, our product is trust. We believe that trust comes with transparency. Our Cost Plus Drugs business model is amazingly simple: We buy drugs and we sell drugs. No rebates, no magic, no complications. We keep our business simple, which allows us to keep our pricing so low.
Hereâs how it works. Cost Plus Drugs carries 2,500 drugs. Our goal is to carry every single one that weâre legally able to carry. When you go to Cost Plus Drugs and find the medication that your doctor prescribed, we will show you our actual cost, what we truly pay for it, our markup of 15%, and the pharmacy fill and shipping fee of $10.
If you want to pick up your prescription at a nearby pharmacy, you can choose a pharmacy in our Team Cuban Card network for the same price, plus a fee that goes to the independent pharmacist. All of it is completely transparent for anyone to see at any time. In fact, we will happily send our complete price list to anyone anywhere, so you can see what our prices are.
Try asking that to one of the big three PBMs. The biggest players do everything possible to hide and obfuscate everything they do.
We can bring back trust and transform our system into one that we can once again be proud of. We simply need to introduce transparencyâreal transparencyâand encourage government agencies and self-employed insurers to act in their own self-interest and do whatâs best for the wellness of their employees and patients.
Unfortunately, Mark's suggestions are likely to never come to light. As another poster states:
I have so much respect for Mark Cuban taking on this cause, especially given all the choices he could make. Kudos.
So it brings me no joy to point out a few hard lessons I've learned over the last 15 or so years in pursuing similar goals but seeing little progress in the macro trends.
The four biggest lessons are perhaps these:
1) Downside risk. Even if all the things you say about PBMs are true and the HR department, CFO, and CEO agrees with you, you are asking them to fire the following:
- their benefit consultant who is likely in bed with 1 or all 3 big PBMs
- their health insurer who owns the PBM
- the specialty/mail order pharmacy that services many employees
- the ancillary programs offered by PBMs (MTM, adherence, etc)
- a bunch of other companies as partners that help with bells and whistles
Ripping the PBM out means a lot of disruption that could cause impacts to employees, their benefits, and introduce some unknowns by using an alternative.
2) Upside value. What in return does the employer get by switching to a standalone PBM? Save 10-20% on generic medications which represent 2%-3% of overall healthcare spend? This isn't that much. A PBM alternative would need to offer much greater savings across the board (and prove it). This is hard to do because for all their ills, the one concept that most everyone should understand is that scale means purchasing power. Thus the big 3 PBMs can get bigger rebates that smaller PBMs with fewer lives. Even if the PBMs don't pass them through, would you rather have 90% of 100K or 100% of 70K? While I am sure that some PBMs can save money over the Big 3, inevitably many need certain formulary restrictions or certain pharmacy changes in order to make the numbers work.
3) Vertical rules. PBMs were so smart to go vertical and integrate into insurance/pharmacy/provider stacks. It makes it so it's hard to "rip and replace" just the PBM without doing business with the same insurers. The bundled offering means the dollars can move between the two (and offer combined discounts) or that the insurer/benefit consultant doesn't have to play nice with the PBM. Why wouldn't you use the CVS PBM if you're going with Aetna or Evernorth if you're going with Cigna?
4) No leadership in the herd. If employers were serious, why have ALL the cooperative efforts to create alternative insurers/PBMs failed over the last 30 years? Where is the full stack solution of insurer/PBM/consultant that HR departments, CFOs, and CEOs can't wait to talk to? Let's face it: It doesn't exist. Yes, there are some bright spots in certain pieces of the puzzle that exist such as Mark Cuban Drug Co, Costco, and a few others but the full enchilada? No way. Meanwhile the HR department continues to act like Toby Flenderson and resign those contracts (which are below the market average for a company of their size ;).
