Pharmacy benefit managers need to be pulled into the light

For those of us in the healthcare industry, it’s hard not to feel like we’re experiencing a bit of whiplash.  Proposals to help patients save money on the soaring cost of prescription drugs are on the table, then off the table faster than one can keep up with.   One such example — a Trump administration proposal that would have actually saved patients money and reigned in the overly powerful and money grabbing Pharmacy Benefit Manager industry has been scrapped.

The “rebate rule” as it was known was brilliant in its simplicity.  Instead of pharmaceutical companies being forced to offer rebates to PBMs in order to guarantee their products would be included on insurance company’s prescription drug formularies, those savings would instead go directly to consumers, knocking down the potentially huge out-of-pocket costs that insurance companies force patients to pay for needed medications.

The initial focus of these changes would have been directed at government-run programs like Medicare and Medicaid, with the hope being that eventually, when proved successful, the commercial market would follow suit.

So, what happened? It’s unclear.  The proposal was pulled unceremoniously with little fanfare beyond the first news cycle. Then in late July, there was a bipartisan effort in the Senate to resurrect similar policies, which could be good news, but with Congress home for the summer recess, it’s not clear how or when that proposal will see any movement.

What is clear is that dropping the rebate rule was a win handed to PBMs and the insurance industry as a whole.  For them, they get to maintain the status quo, while patients continue to struggle with the cost of exorbitant co-pays.

For patients it is clearly another loss.  Americans say they are increasingly worried about the cost of their medications — poll after poll shows the issue to be a major concern, heading into an election year.

This back and forth does little to help reassure patients that our federal lawmakers are working for them, and so clearly, we need to call on our state lawmakers to do all they can do in order to help ensure patients have access to the medications they need.  To do otherwise and wait for progress out of Washington seems a sure way to have sicker patients in short order.

One of the first orders of business for states looking to make their residents healthier while at the same time saving money is to focus on the role of Pharmacy Benefit Managers.  Many states have taken these steps.

Connecticut lawmakers were among the first to recognize the egregious role that PBMs play in driving up costs for consumers —being one of the first states to pass legislation that finally allowed pharmacists to tell patients that they could pay less for medication if they bypass their insurance plan and pay directly out of pocket.  This was known as the ‘gag clause’ and it was a move lauded by patient groups like ours.

But it’s not enough.  PBMs and their insurer clients are cooking up schemes to make money and its nearly impossible to stay on top of it all.  Without true oversight of this industry, the wool will continue to be pulled over the eyes of lawmakers, consumers, and all taxpayers.  Connecticut needs to do more to protect patients as other states have begun to do.

With some basic investigations, several have found that the PBMs the state has hired have actually been costing their taxpayers millions of extra dollars, while nothing has improved in terms of lowering the out of pocket costs for patients. PBMs have craftily inserted themselves into state Medicaid programs, earning millions in negotiation fees.  New York recently passed a law prohibiting “spread pricing” –an opaque practice where the PBMs were making money by charging the state more than what was being reimbursed to pharmacies for prescriptions.  Estimates are that New York could see north of $40 million in savings per year with the new law.

That’s real money that should be being passed on to consumers in terms of lower co-pays and premiums.  Instead, until now it was lining the pockets of the PBMS.

If we have any real chance in bringing down healthcare costs in a meaningful way, these unregulated practices need to be pulled into the spotlight, investigated and stopped.

It’s the only way to have a healthier America.

When patients have affordable access to their prescription medications, they take them.  They remain stable.  Their conditions do not worsen.  By adhering to a medication regimen, patients don’t end up with further complications—meaning they stay out of the hospital.  No need for a trip to the E.R.

Until states start taking action, politics and greed will continue to win and patients will continue to lose.

Rich Pezzillo is the Executive Director of the New England Hemophilia Association.