Most people likely do not even know what a Pharmacy Benefit Manager (PBM) is. PBMs allegedly add value to your prescription drug benefit through negotiating drug discounts with pharmaceutical companies on behalf of health insurance companies. However, based on everything we know, PBMs pocket a lot of those savings or share them with the health insurance companies covering your prescription drugs and drive up your prescription drug costs.
Last week, the Senate Commerce Committee held a hearing in which members expressed tremendous frustration over potentially “anticompetitive” PBM activities that drive up costs for people. In Senator John Tester’s words: “I gotta be honest with you, the way I see the situation on PBMs I don’t know why the hell they even exist.”
The Committee is considering the Pharmacy Benefit Manager Transparency Act of 2023. The bill is designed to ensure better state and federal oversight of PBMs. Instead of bringing down drug prices for people, PBMs are putting neighboring pharmacies out of business and running away with enormous profits.
The Senators on the committee want “better transparency” as to what is going on with PBMs. That would be fine, but that won’t stop the PBMs from keeping the discounts they secure from manufacturers for themselves and not passing them along to patients.
The lack of transparency in PBMs helps them to profit. They used to work independently of health insurers, designing formularies with lower-cost drugs, steering people to generics and mail-order options. But, that all has changed dramatically.
Today there are three PBMs, all owned by insurance companies, which control 80 percent of the prescription drug market. CVS Health alone controls one third of the market. Cigna controls more than a quarter of the market (26 percent). And UnitedHealthcare controls more than a fifth of the market (21 percent).
Senator Grassley pointed out that PBMs can move people to buy more expensive drugs in order to increase their profits. We have seen this with CVS Health, which has been found not to include some generic drugs in their formularies or in their drugstores as a way to get people to buy more costly brand-name drugs.
Here’s an example of how PBMs drive up costs to people. Rosuvastatin is a low-cost generic drug to lower cholesterol. It costs a pharmacy around $10 for a 90-day supply. Somehow, the PBMs make the average wholesale price for rosuvastatin $805.40 for a 90-day supply.
Rosuvastatin had been in the lowest copay tier in Medicare Part D. But in 2021, the PBMs moved the drug to a Tier 3 drug from a Tier 1 drug, driving up the copay to $141 from $15. Insanity.
Part D prescription drug insurers appear to engage in these practices as much as any other insurer. In fact, at times, you can save money on your drugs by not using your Part D insurance coverage and paying for your drugs out of pocket.
One big step Congress and the Centers for Medicare and Medicaid Services could take to help people with Medicare would be to require Medicarea Part D plans to tell their members that when they can purchase their drugs out of pocket at less cost, they will reimburse their members for the cost of those drugs. Better still, Congress should require Part D insurers to include on their formularies the lowest-priced version of the drugs they cover.
Here’s more from Just Care:
- Prescription drug middlemen, PBMs, will always drive up drug costs
- Don’t rely on Mark Cuban’s Cost Plus Drugs for the lowest prices
- Germans force competition among drug companies; should the US follow suit?
- 2023: Medicare Part D prescription drug coverage and costs
- Primary care through CVS? Financial incentives pose a serious concern
Leave a Reply