Epilepsy Talk

The REAL crooks who are stealing your medication money… | July 23, 2024

Their gain is our loss. In a big way.

Welcome to the world of pharmaceutical benefit managers.

PBMs were created in the 1960s to negotiate drug prices and coverage with pharmaceutical manufacturers and insurers. In theory, these negotiations should help individuals enrolled in health insurance plans save money by finding the best prices for consumers. In reality, these middlemen often do the opposite.

They serve as intermediaries between insurers and pharmaceutical manufacturers, determining which drugs insurers will cover and how much they cost. But they are incentivized to opt for the most expensive medicines and slash drug reimbursement rates to maximize profit, hurting both patients and small pharmacies.

In short, they’re unregulated middle men.

Research suggests that PBMs profit by artificially inflating drug prices, capturing portions of the discounts they negotiate for insurers and pocketing the difference between what insurers pay and pharmacies receive.

In addition to negotiating discounts with manufacturers, PBMs set payment terms for the pharmacies that buy and dispense the drugs to patients.

They are the dominant middlemen among drugmakers, drugstores, insurers, employers, and patients.

The three largest PBMs, are owned by the country’s biggest health care companies.

CVS Health, Cigna, and UnitedHealth — which control 80 percent of the prescription drug market, have considerable control over both the pharmacy and insurance markets.

CVS Caremark is owned by pharmacy colossus CVS Health, also owns the insurer Aetna.

Express Scripts is owned by the massive insurer Cigna; while OptumRx is owned by insurance giant UnitedHealthcare.

Accordingly, some experts report that PBMs overcharge for generics; The Wall Street Journal estimated that Cigna and CVS Health, both of which own PBM services, are able to charge prices for specialty generic drugs that are 24 times higher than what manufacturers charge.

With spread pricing as a business practice, it is no wonder that, according to one study, PBMs make four times more in gross margins for generic drugs compared with brand-name drugs.

In short, the drug pricing system is “perversely incentivized to pay off the middlemen while squeezing profits out of every single other part of the supply chain,” said Monique Whitney, executive director of the advocacy group Pharmacists United for Truth & Transparency.

The drug industry mushroomed as prescription drug spending grew about 200-fold between 1967 and 2021.

In other words, these conglomerates run nearly every stage of the pricing process with hardly any checks on prescription drug costs.

With so much power, PBMs have evolved from “cost savers” to companies that profit at nearly every stage of the drug supply chain.

Say good-bye to your mom-and-pop drug store.

The number of independent pharmacies dropped by nearly 50 percent from 1980 to 2022 — and industry experts predict that if nothing is done to address the problem, even more local pharmacies will close by the end of 2024.

Even the government can’t stop them. Although numerous bills have been introduced.

You might say our own health care system is broken.

Policymakers must act to prevent PBMs from engaging in these wasteful and harmful business practices.

There are several bipartisan bills that would help make progress in this regard.

From congressional hearings to political messaging efforts, pharmacy benefit managers (PBMs) have been at the center of recent drug pricing conversations.

But, It ‘s also important to keep in mind that PBMs are only one part of a complex drug pricing system, which is full of profit-seeking entities that drive up drug prices.

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Resources:

5 Things To Know About Pharmacy Benefit Managers

https://www.commonwealthfund.org/publications/explainer/2019/apr/pharmacy-benefit-managers-and-their-role-drug-spending

https://www.npr.org/sections/health-shots/2023/07/07/1186317498/pharmacy-benefit-manager-pbm-ads-congress

https://www.reuters.com/business/healthcare-pharmaceuticals/why-are-us-pharmacy-benefit-managers-under-fire-2024-04-16/

https://jacobin.com/2024/03/pharmacy-benefit-managers-drug-prices-congress#:~:text=PBMs%20were%20created%20in%20the,middlemen%20often%20do%20the%20opposite.

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