JustCare

Tag: Caremark

  • FTC criticizes Rx middlemen in new report

    FTC criticizes Rx middlemen in new report

    In a health care world filled with insane prices and complexities, the prescription drug middlemen, sometimes called Pharmacy Benefit Managers or PBMs, are at the top of the “is this even possible” list. The Federal Trade Commission or FTC criticizes PBMs sharply in a new 71-page report, reports Reed Abelson and Rebecca Robbins for The New York Times. Only when the government negotiates prescription drugs prices will we see fair prices for prescription drugs; PBMs would cease to exist.

    So that we’re all on the same page: In a better world, PBMs would negotiate lower drug prices from pharmaceutical companies so that health insurance companies could pass on those savings to their members. In our world, the big health insurance companies own the PBMs and pocket all or most of the savings for themselves. Insured Americans end up paying more for their drugs in many cases than people without insurance. Sometimes, their insurers direct them to use higher cost brand-name drugs (because the pharmaceutical manufacturers pay the PBMs a fair bit to steer people to those drugs); people’s insurers might not even offer the generic substitute or do so at a higher copay.

    PBMs keep drugs prices so high that, in many instances, even with a Medicare Part D prescription drug benefit, you will pay less for the full cost of your prescription from Costco or using GoodRx than the Part D copay. PBMs also sometimes overcharge people for the cost of drugs.

    What the FTC says: “[T]hese powerful middlemen may be profiting by inflating drug costs and squeezing Main Street pharmacies.” They “wield enormous power and influence” and their practices “can have dire consequences for Americans.” The only quibble I have with that statement is the “may be;” PBMs profit substantially from these tactics.

    The FTC has not sued a PBM yet. But, the PBMs and the big insurers who own them have taken notice and now worry that they will be sued for anticompetitive conduct. Until there’s a Democratic majority in both houses of Congress and a Democratic president, it seems unlikely that our federal government will block their bad behavior. The Republicans appear to have no interest in reducing drug prices.

    Who owns the three biggest PBMs? CVS Health owns Caremark, UnitedHealth Group owns Optum Rx and Cigna owns Express Scripts. These three PBMs control about 80 percent of the prescription drug market in the US.

    It seems to me that the only way to stop the PBMs from driving up drug costs is to put them out of business. In an ideal world, the US would negotiate drug prices as every other wealthy nation does. PBMs would lose their value. Americans would not be victims of PBM abuse.

    As you might expect, the PBMs disagree strongly with the FTC’s report. They are huge corporations, and they will fight back as hard as they can. They correctly claim that they have enormous leverage to bring down drug prices. But they fail to acknowledge that once they negotiate lower prices, they pocket most, if not all of the savings, and/or pass the savings on to the health insurers who own them.

    The evidence speaks volumes: The PBMs have pharmacies that send mail-order drugs to patients. The FTC found that PBMs paid their pharmacies a lot more for two generic cancer drugs than it would cost to buy these drugs directly from a wholesaler. As a result, in less than three years, they made $1.6 billion in revenue from these two drugs.

    Here’s more from Just Care:

  • Primary care through CVS? Financial incentives pose a serious concern

    Primary care through CVS? Financial incentives pose a serious concern

    Lucia Ryll shares her opinion in MedPage Today on the risks posed by CVS’ latest move into primary care. Ryll recognizes the obstacles many people face accessing primary care, including delays that can result in poor health outcomes. She questions whether CVS Health offers a solution in the form of primary care doctors at its clinics, given CVS’ financial incentive to maximize profits.

    CVS Health now has nearly 10,000 retail stores. It also operates just over 1,000 MinuteClinics. Caremark, its Pharmacy Benefit Manager (PBM) serves 105 million people. It sells 6,000 CVS-branded medical products. And, it provides health insurance to 34 million Americans. Enlisting a large team of primary care doctors to deliver primary care at CVS clinics is its latest business initiative.

    CVS’ expansion into primary care will be through its MinuteClinics renamed HealthHUBs. With this expansion, CVS will engage primary care doctors to provide care to individuals, sell these individuals medicines through its pharmacies, cover medicines through its insurance plans and build its formulary (list of covered drugs) through its PBM. What does that mean for individuals who rely on CVS for these services?

    No question that it could mean easier access to primary care for people, as most people live close to a CVS.  But, financial incentives could get in the way of CVS providing people with high-quality care.

    CVS as insurer should have an incentive to keep people out of the hospital, to keep its spending down. But, will it deny access to hospital care inappropriately, because hospital care is expensive, in order to maximize profits? CVS could do so through prior authorization requirements and mandates for people to receive less costly treatments, perhaps requiring a telehealth visit or a visit to a HealthHUB before going to the hospital.

    And, who knows what incentives CVS will give the primary care doctors at the HealthHUBs. These primary care doctors might be financially disincentivized to refer patients out of network even if they need out-of-network care. They also might be financially incentivized to prescribe patients drugs on the CVS Caremark formulary rather than lower-cost drugs. Physicians are human and subject to the same financial incentives as everyone else.

    What’s most concerning is what we are seeing throughout Medicare Advantage–a financial incentive to keep people in poor health from enrolling. The CVS Health plan might find that it maximizes profits by avoiding enrolling people with complex and costly conditions.

    Yes, it’s fair to think that CVS has the leverage to bring down health care costs and improve quality in our health care system. But, there is no sign that it’s willing to do so. In fact, a whistleblower lawsuit that Just Care reported last week indicates that CVS is in it for CVS, failing to include generic drugs on its formulary or to stock them in its pharmacies when brand-name drugs generate greater profits for CVS. With these brand-name drugs, CVS profits at the expense of its enrollees who are forced to pay more out of pocket for their drugs.

    Bottom line: CVS’ for-profit vertical integration easily could undermine access to quality care, lead to poor health outcomes and drive up healthcare costs for enrollees in its health plan. There’s virtually no transparency into what CVS is doing. Who will ensure that CVS is held accountable for bad acts?

    Lyll suggests that global payment models, through which a healthcare system is paid a flat rate could be helpful. But, with little transparency as to how CVS operates, there’s cause for serious concern. No data, there’s no way to know whether there’s value. And, a fixed payment to a healthcare system leaves it up to the system to decide what to pocket for itself and what to pay for. That’s a scary situation, as we have seen over and over again, with chain nursing homes among other health care businesses.

    I’m with Susan Rogers, MD,  “[CVS] is not a system designed to improve healthcare while saving money. There is no way that a system with middlemen whose mission is to make money can do so with providers whose mission is to deliver healthcare that is needed and not deny that care to increase profits. This is a system that will destroy the core of patient physician relationships when decisions are made driven by making profit, not by what doctors feel is indicated.”

    Here’s more from Just Care:

  • FTC investigates CVS Caremark and other Pharmacy Benefit Managers

    FTC investigates CVS Caremark and other Pharmacy Benefit Managers

    Given the number of cases against corporate health insurers for violating their contractual obligations with Medicare, the issue is not whether there will be more, but which health insurers will be found culpable, when, and will the federal government protect enrollees from the bad actors. The FTC is now taking a deep look into the largest Pharmacy Benefit Managers (PBMs), all of whom are linked in one way or another to a health insurance company covering Medicare benefits. What would the FTC or anyone else need to find for Congress to step in to remove PBMs and private insurers from the administration of Medicare benefits?

    Pharmacy Benefit Managers are middlemen that work in collaboration with the Medicare Part D health insurers. PBMs negotiate rebates and fees with drug manufacturers. They also decide which drugs go on the health insurers’ list of covered medicines, where people can buy their prescriptions, what they pay out of pocket, and a slew of related policies. PBMs pay pharmacies to fill prescriptions for Part D enrollees.

    Most recently, the law firm of Frier Levitt announced a significant victory on behalf of a minority and woman-owned specialty pharmacy, Mission Wellness, against CVS Caremark. CVS Caremark is a Pharmacy Benefit Manager (PBM) serving the Medicare population through Medicare Part D. Mission Wellness prevailed on its claim that CVS Caremark imposed unreasonable “direct and indirect remuneration” or DIR fees on it.

    In arbitration, Frier Levitt obtained an award of more than $3.6 million for breach of contract. CVS Caremark was ordered to return all the DIR fees it had received from Mission Wellness as well as to pay attorneys’ fees and interest. But, to date, CVS Caremark has not paid the amount awarded.

    If you think that the CVS Caremark breach of contract does not affect you, think again. When a Medicare contracting entity fails to pay health care providers what they are due, providers reconsider whether they will continue treating people with Medicare. Mission Wellness lost money as a result of the DIR fees, while it was a member of CVS Caremark’s Part D network.

    You might wonder why CMS isn’t looking out more for people with Medicare and hasn’t cancelled its contract with CVS Caremark. According to Frier Levitt: “Caremark refused to provide the required discovery throughout the arbitration, including discovery necessary to “audit” Caremark’s calculations of medication adherence, which serves as the basis for its recoupment of DIR fees.  Even after being sanctioned by the Arbitrator, Caremark refused to provide the basis for the DIR methodology.”

    Right now, the FTC is investigating CVS Caremark and other PBMs in the Medicare Part D program regarding recoupment of DIR fees. The biggest PBMs are part of corporations that include health insurance companies and pharmacies. The FTC wants to know what fees PBMs charge pharmacies that are not in their networks, what they do to incentivize patients to use their pharmacies, their prior authorization policies, how rebates and fees from drug manufacturers affect which drugs are on a formulary and what people pay, and more.

    Here’s more from Just Care:

  • CVS plans to buy Aetna: Will consumers pay more?

    CVS plans to buy Aetna: Will consumers pay more?

    CVS Health, a chain of retail pharmacies, plans to buy Aetna for $69 billion in an effort to compete against Amazon in the health care space. CVS further plans to build a network of medical clinics providing a range of primary care health care services inside its pharmacies.

    According to NPR, with the purchase of Aetna, CVS wants to transform itself from a pharmacy chain to a health care company. Today, CVS provides drug benefits to 90 million people in the US, and it has MinuteClinics in 1,100 CVS and Target stores. As it expands further into providing health care, CVS pharmacists and nurse practitioners will assist people with diabetes, high blood pressure and asthma at these clinics and monitor them remotely in some instances.

    CVS hopes that people will be attracted to these health hubs because of their convenience. Without a doubt, it looks forward to greater profits as a result of the merger. As a general rule, these large mergers of health care companies give them more market power, reduce competition and drive up health care costs, with little if any public benefit.

    As CVS builds its market share, experts believe it will have more power to increase prices with little fear of losing business. Aetna can create incentives for its members to use CVS pharmacies and clinics. Patients who choose not to use the CVS clinics could be left paying more for medical care at the doctor’s office.

    CVS’ ownership of Caremark, a pharmacy benefit manager (PBM), is likely already driving up your drug costs. Caremark gets rebates from pharmaceutical companies to put their drugs on insurers’ formularies. They are not required to disclose the amount of these rebates. They are pocketing a lot of this money rather than passing along the lower prices to patients needing prescriptions. And, in some cases, PBMs are responsible for copays on your drugs that are higher than the drugs’ price if you bought them without your insurance. It’s no wonder that, to save money, millions of people are buying drugs online from certified international pharmacies through Pharmacy Checker, or buying their drugs while they are abroad.

    Here’s more from Just Care: