Almost everyone knows the story of Robin Hood who stole from the rich to give to the poor. But what do you call someone who takes the pockets of the health care providers who serve the poor, while overcharging the taxpayers who foot the bill for the patient’s prescription drug coverage?
In short, Pharmacy Benefit Managers (PBMs), pharmaceutical intermediaries who work on behalf of insurance companies to “manage” prescription drug benefits for Americans.
Today, PBMs wield enormous market power by dictating access to drugs and the flow of the vast majority of dollars through the prescription drug supply chain. They add targeted complexity and opacity to drug transactions, adding unnecessary costs and making it harder for consumers to get the drugs they need.
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To be clear, not all PBMs are bad. However, the biggest players in the industry are used to finding smart ways to line their pockets while taking advantage of an unnecessarily convoluted prescription drug pricing system.
One of the most egregious ways in which PBMs manage to increase their profits is to harness the power they have in the management of the state’s Medicaid programs. Medicaid is designed to cover the health costs of the poorest and most vulnerable. Within these state programs, PBMs drew the window into the eyes of state officials for a decade. One way has been to crush local pharmacy providers with low reimbursements for the drugs they dispense while charging state Medicaid programs rates for the same drugs PBMs have underpaid for. .
And it’s also happening here in Pennsylvania. A recent report from Lehigh County found that a lack of transparency in the drug pricing process resulted in lost savings of about $ 1.4 million in that county alone. Pennsylvania is not alone.
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Just west, in my home state of Ohio, after pharmacy providers in underserved communities objected to massive underpayments on prescription drug claims, the Department of Medicaid and the Former State Auditor (now Attorney General) Dave Yost discovered a whopping $ 244 million in PBM bills in just one year from the Ohio Medicaid program. Taxpayers there are going to get some of their money back because a PBM last week settled claims with Ohio for $ 88 million, with Mississippi for $ 55 million and set aside over $ 1 billion. of dollars in total that could go to other states.
And in the south, in Maryland, state officials discovered similar costly practices, where PBMs engaged in the same controversial practice of “margin pricing,” where they paid local pharmacies at low prices. , billed the state at a hefty price and pocketed the difference of $ 72 million.
These PBM pricing practices have caused real damage to people, their healthcare, and their communities. According to a recent study by JAMA Internal Medicine, one in eight pharmacies closed between 2009 and 2015, most of those involving independent pharmacists located in poorer urban areas.
This shouldn’t come as a surprise. Pharmacies in poor urban areas will have higher Medicaid populations and will be much more dependent on revenues from the distribution of Medicaid claims to support their businesses. So when PBMs feast on Medicaid payment rates, it hits urban and rural pharmacies in downtown and rural areas the hardest. If this persists long enough, it will rob local pharmacies of impoverished communities, turning them into “pharmaceutical deserts”.
Beyond being just an inconvenience, the loss of a community pharmacy also means less access to health care for underserved populations. Local pharmacies offer vaccines, long-acting injectables, diagnostic tests, durable medical equipment, disease management services, life-saving medicines and, for many communities, the only access to a health care provider. health for miles.
It’s time to change.
Biparty solutions have been proposed to Congress and a number of states are ending the practice of pay-as-you-go pricing. But sadly, research suggests that PBMs are adjusting to the growing scrutiny and focus more by raising their fees, overcharging specialty drugs, and imposing heavy clawbacks on pharmacies.
Unfortunately, due to their growing size and specialization in gymnastics pricing, PBMs have pharmacies, plan sponsors, and patients at their mercy. Regarding their games in Medicaid programs, they jeopardize the accessibility to health care of the most disadvantaged in our country.
Without closer scrutiny and greater accountability of PBMs, the current health care inequalities that plague our most vulnerable will only get worse. Amid the debate over prescription drug costs, the Biden administration and Congress would be well served to tackle the lowest fruit – the billions in hidden drug markups pocketed by PBMs. The urgency of the pandemic and the harsh economic realities it brings to communities across the country are forcing us to change course before it is too late.
Antonio Ciaccia is CEO of 46brooklyn Research, a non-profit organization dedicated to drug price transparency.