JustCare

Tag: CVS

  • Bi-partisan legislation could reduce drug middlemen profits, but unlikely to reduce drug prices

    Bi-partisan legislation could reduce drug middlemen profits, but unlikely to reduce drug prices

    Stat News reports that bi-partisan Senate legislation to address unexpected medical bills includes legislation that could bring down the profits of the middlemen who buy drugs from pharmaceutical companies on behalf of health insurers. But, the legislation does not hurt pharmaceutical company profits or in any way ensure uniformly lower drug prices. We need Congress to regulate drug prices.

    Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA), who head the Senate health committee, have crafted a bill that would stop Pharmacy Benefit Managers (PBMs) from being able to keep for themselves the difference between the price the PBM charges an insurer, such as Medicaid, for a drug and the price it pays the pharmacy for the drug, “the spread.” The spread could be many times the pharmacy price, as Bloomberg reports.

    The bill does not appear to hurt pharmaceutical companies. Indeed, it could help them. They might be able to take advantage of this law to raise the wholesale price of drugs and profit more without affecting the price people pay for them.

    If this legislation is enacted, PBMs also would have to report more information about the amount they pay for drugs and the amount of the rebates they get. Their clients, Medicaid and commercial insurers, would receive all rebates and discounts. This would likely put an end to, or significantly reduce, rebates and discounts. It also could mean that insurers pay PBMs more for their services. Would it bring down drug prices?

    Under the legislation, PBMs would pay a penalty of $10,000 a day if they did not comply. For PBMs, $10,000 a day is a drop in the bucket. They are multi-billion companies for whom $3.65 million a year is chump change. In 2017, they earned $223.7 million from the spread on Ohio Medicaid alone.

    In October 2018, the Patient Right to Know Drug Prices Act became law. It forbids gag clauses, which have kept pharmacists from telling patients when the actual price of a drug is less than its copay.

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  • Part D insurers bilk Medicare and taxpayers

    Part D insurers bilk Medicare and taxpayers

    The Wall Street Journal reports on a longstanding practice of health insurance companies, which offer Medicare Part D prescription drug benefits, bilking Medicare and taxpayers. As a result, the government overpaid these insurers to the tune of more than $9 billion over ten years. How did this happen and when will it stop?

    As the WSJ explains, the Centers for Medicare and Medicaid Services (CMS) pays these insurance companies in two parts, based on federal legislation. The goal is to help ensure that they keep down Part D premiums, as well as to protect the insurers if they end up with too many members who take a lot of prescription drugs. But, the result is that many of the insurers, including the very biggest, project their base costs to be significantly higher than they end up being. These insurers benefit from their overestimates.

    Under federal law, if Part D insurers estimate their costs at up to 5 percent more than they spend on prescription drugs and administration, they can keep the full amount of the overestimate. That money is on top of the profits embedded in their estimates, which are part of their administrative costs. If their estimate is more than 5 percent above their costs, they get to split the extra dollars, above the 5 percent, with the government.

    It’s a confusing formula. But, there are some big takeaways. Part D insurers make off like bandits with taxpayer dollars if they overestimate their costs. If Medicare administered the drug benefit directly, it would save billions of dollars. If it negotiated drug prices or paid drug prices based on the average of what other countries pay, it was save some $250 billion a year more.

    CVS Health, UnitedHealth and Humana, three of the largest Part D insurers covering about half of all Part D participants, profit most at the expense of taxpayers. And, CVS effectively concedes that it cannot afford not to overestimate costs if it is to protect its finances.  “[W]e can’t have years where we lose money.”

    The WSJ analysis revealed that almost seven in ten people with Medicare were enrolled in a Part D plan that overestimated its costs by 5 percent or more. More than nine in ten people (93 percent) enrolled in a  UnitedHealth Part D plan were in a plan that had overestimated costs by at least 5 percent.

    The big Part D health insurance companies have the data they need to submit accurate bids to CMS. They would not so consistently overestimate their costs to such a high degree if there were a financial disincentive for them to do so. But, they have every incentive to overestimate their costs, bilk taxpayers and deliver their shareholders greater returns. Rather than penalizing them for their overestimates, the government rewards them. It allows the insurers to keep all of the excess funds up to five percent, along with some of the excess funds over that amount.

    Isn’t it time for the government to rein in drug prices and fold the prescription drug benefit directly into traditional Medicare?

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  • CVS Caremark accused of $1 billion in Medicare drug fraud

    CVS Caremark accused of $1 billion in Medicare drug fraud

    Pharmacy benefits managers (PBMs)–middlemen who determine the list of approved drugs for health insurers and pay pharmacy claims– argue that they drive down drug prices. But, they also can drive drug prices up in a host of ways. StatNews reports on a whistleblower lawsuit that charges CVS Caremark, a pharmacy benefit manager, of reporting higher than actual generic drug prices to the federal government, defrauding taxpayers, Medicare and older adults and people with disabilities.

    According to the Aetna actuary who filed the lawsuit, CVS Caremark overcharged people with Medicare enrolled in a Part D drug plan and the federal government for generic prescription drugs. Put differently, the price CVS Caremark paid pharmacies for generic drugs allegedly was less than it charged Aetna’s Medicare Part D plans. CVS Caremark pocketed the overpayments.

    CVS Health claims the allegations of fraud are “without merit,” but, the whistleblower in this lawsuit discovered that people with Medicare in other Part D plans were paying less for generics than CVS Caremark was charging Aetna Part D plan members. Why would CVS Caremark not have been able to achieve the same low generic prices for Aetna’s Part D plan members as other Part D plans were able to get for their members? And, CVS Caremark charged Aetna Part D plan members significantly more–25 to 40 percent more.

    CVS is currently in the process of buying Aetna. Had it owned Aetna at the time the lawsuit was filed, in 2014, Aetna’s actuary likely would have had no reason to look into the price discrepancy between what its members paid for generics and what other Part D plan members paid. Aetna would have benefited from the overcharges.

    If Congress stepped in and allowed the federal government to negotiate prescription drug prices for everyone–effectively to set drug prices no higher than the average price of the seven wealthiest countries in the world–not only would it bring down drug prices for everyone by nearly 60 percent, but these types of taxpayer and consumer fraud would not be possible.

    If you want Congress to rein in drug prices, please sign this petition. 

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  • 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:

  • Amazon likely gearing up to sell prescription drugs

    Amazon likely gearing up to sell prescription drugs

    Gizmodo reports that Amazon may be gearing up to sell prescription drugs online. The mega-retailer has sought and received approval for a wholesale pharmacy license in 12 states and has at least one additional application pending. If Amazon does indeed decide to sell drugs online, will Amazon drive down drug prices?

    To be clear, as of now, Amazon’s interest in selling prescription drugs remains speculation. Amazon has not confirmed its intent to sell prescription drugs. But, it has a license to do so in Nevada, Arizona, North Dakota, Louisiana, Alabama, New Jersey, Michigan, Connecticut, Idaho, New Hampshire, Oregon and Tennessee. And, its license application is pending in Maine.

    Amazon  could use these licenses in a number of ways. It needs the licenses to sell medical devices. And, some think it may want to sell prescription drugs in its Whole Foods stores. If it goes into the business of selling prescription drugs, it will shake up the market considerably.

    Currently, the big chain pharmacies have some influence over the price of drugs, and they have used that influence largely to drive up prices for brand-name drugs. CVS, for example, receives rebates from manufacturers for the drugs it sells through the pharmacy benefit manager business it owns. Yet, it does not appear to be passing on these rebates to consumers to lower their costs. Amazon is likely to receive rebates as well and, in order to compete in the marketplace, may decide to pass them on.

    Whatever savings Amazon is able to deliver, it will never get the deep discounts on brand-name drugs that are needed to keep drugs affordable. For that, we need the power of the federal government. If you want Congress to rein in drug prices, please sign this petition.

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