Sticker shock at the pharmacy? There’s more than meets the eye: Antonio Ciaccia (Opinion)

http://www.cleveland.com/metro/index.ssf/2016/12/sticker_shock_at_the_pharmacy.html

Guest columnist Antonio Ciaccia is director of Government & Public Affairs for the Ohio Pharmacists Association.

There’s much debate about drug prices. Who pays and how much is complicated. Manufacturers get blamed (sometimes rightly) for high prices, and pharmacists face sick, angry patients whose prescriptions cost too much. Most of the time, there is an invisible third-party between the pharmacist and the patient. It’s time to look at the multi-billion dollar industry in the middle of nearly every prescription drug transaction.

Insurance companies use pharmacy benefit managers – PBMs – to handle the prescription drug part of their plans.  The PBM tells the drug manufacturer it will provide insurance coverage in return for a lower price.  A few PBMs represent millions of patients which can be leveraged to demand greater rebates from manufacturers. Insurers like this because they hopefully can get rebates from the PBM when covering your prescriptions.

Your pharmacy actually purchases the drugs. Since the pharmacy paid for the medication, you’d think the pharmacy would set the copay. Wrong. That’s dictated by the PBM.

When you take a prescription to the pharmacy, it takes time to fill the order. One reason is that your pharmacy contacts the PBM to see if your prescription is covered, and how much copay you’ll be responsible for. The pharmacy generally expects to recoup what it paid for the medication, plus a dispensing fee, covering the cost of employing pharmacy staff, the computer systems, and other pharmacy expenses.  

Here’s an example of how the math works. The pharmacy buys your prescription drug for $50 and your copay is $10. The pharmacy needs to recoup $40 from the PBM, plus a little more for overhead. Ohio pharmacists are finding that in many instances, $40 never arrives. While that doesn’t happen on every prescription, it’s increasingly common for PBMs to under-reimburse the pharmacy. This is one reason Ohio lost more than half of its independent pharmacies in the last 20 years.

Your local pharmacy isn’t the only one getting stiffed by PBMs. Patients are too. They just don’t know it, and the pharmacist is forbidden to tell them.

Let the numbers explain again. Your pharmacy buys the drug for $50, but this time the PBM tells them to charge you a $70 copay. Your pharmacist is obligated to charge you whatever the PBM says.   Where does that extra $20 go? The PBM performs a “claw-back,” collecting the overcharge from the pharmacy. Under PBM claw-back schemes, it’s not a copay – it’s a “you-pay.” The pharmacy got $50 to cover their acquisition cost for the drug (but nothing to cover operating expenses), your insurance paid nothing toward the prescription, and the PBM got the extra $20. The patient is stuck paying more than what the cost of the drug would have been if they hadn’t used insurance at all.

A recent story in The Wall Street Journal explains how PBMs’ pressure for greater rebates from drug makers may play a role in driving drug price increases, which in turn force hikes in copays and premiums. These business practices put PBM profits ahead of patients. And perhaps the most unsavory part is that many PBMs place pharmacies under a contractual gag order that prohibits the pharmacist from saying anything to the patient or plan sponsor about the true drug costs. Reuters reports that a lawsuit accuses UnitedHealth Group Inc., the nation’s largest insurer, for allegedly charging copays for medicines that were higher than negotiated costs, and keeping the difference.

Louisiana law now allows pharmacists to work with consumers to get them the best price, regardless what the PBM says. That’s a start, but it’s only one state, and it doesn’t prohibit all claw-backs. Those serious about controlling the costs of health care should get serious about pulling back the curtain on secret PBM tactics that raise prices and do nothing to enhance patient care.

Have something to say about this topic? Use the comments to share your thoughts, and stay informed when readers reply to your comments by using the Notification Settings (in blue) just below.

Filed under: General Problems