You Don’t Have to Boycott CVS

The dispute over birth control has everything to do with corporate profits and little to do with health care.

www.slate.com/technology/2019/08/boycott-cvs-womens-health-corporate-profits.html

Somehow this week, CVS Caremark’s renegotiation with Pill Club, a mail-to-order birth control delivery service, ballooned into a feminist rights issue, with #CVSDeniesCare and #BoycottCVS trending on Twitter. But the negotiation at hand is not “an attack on women’s healthcare” as Laura Moser of Daily Action called it, nor are women being “financially punished,” as Ilyse Hogue of NARAL Pro-Choice America said. What’s being made out to be a big social justice issue is really not much more than a classic spat between businesses. In fact, far from necessitating a boycott of CVS, I’d suggest, the company’s pharmacy benefit manager is doing consumers a favor.

CVS Health, the eighth-biggest company in the United States, has two important business units: a chain of pharmacies, with which you are probably familiar, and their pharmacy benefit manager, CVS Caremark. Insurers turn to pharmacy benefit managers to help them negotiate lower prices for drugs. While insurers directly negotiate with hospital chains and doctor’s offices to determine the prices they’ll pay for medical procedures, it’s the PBMs that are negotiating with pharmacies to determine what the pharmacy will be reimbursed, along with what consumers’ copays for prescription drugs will be. Around 92 million Americans have CVS Caremark as their PBM—including a big subset of people with employer-based health insurance, people who bought individual plans on the exchange, and at least some people with Medicaid and Medicare Part D plans.

The feud started when CVS Caremark told Pill Club that when CVS Caremark customers bought birth control through Pill Club, CVS Caremark wouldn’t give Pill Club as much money as it used to. While the Affordable Care Act says that insurers have to cover most contraceptives without requiring a copay, this doesn’t dictate the way pharmacies are reimbursed. And it still should matter to consumers how much money the insurer pays the pharmacies for those drugs, because the more money the insurer pays out to pharmacies for prescription medicine, the higher health insurance premiums need to be to cover all those costs. Pill Club wouldn’t comment when I asked it how much it was reimbursed for birth control by CVS Caremark before the rate changes went into effect, or how much it’d be reimbursed after, citing confidential agreements with CVS, but Ali Hartley, vice president of legal and compliance for Pill Club, did say the pricing changes made it “impossible for Pill Club to effectively serve its members.”

The outrage levied at CVS Caremark was largely a response to Pill Club’s own effective rousing of frustration at the idea that a company would pay less for birth control. But there was no moral stance at play here—this was a business negotiation. The goal of any PBM like CVS Caremark is to win contracts with insurers by promising they can negotiate good deals with pharmacies. If they tell pharmacies like Pill Club, Rite Aid, or Walmart, “We used to give you $1 per pill for this drug, but now we’re only going to give you 80 cents,” they’re doing so to curry favor with the insurers, who won’t have to spend as much money as they were spending before. If the PBM tries to set reimbursement rates too low, the pharmacy can walk away from the deal and not work with the PBM anymore, which is what Pill Club is threatening to do. That would mean CVS Caremark customers would no longer have their insurance accepted by Pill Club. If too many pharmacies balk at CVS Caremark reimbursement rates, customers will get fed up when they realize their insurance is only accepted at a few pharmacies and try to switch plans. It’s a delicate juggling act, but it’s one we want CVS Caremark and other PBMs to be playing: If they don’t put pressure on drug prices, health insurance will be even more expensive than what it is today.

As Frank Sloan, the J. Alexander McMahon professor emeritus of health policy and management at Duke University, pointed out to me by phone, PBMs can be an “easy target” for criticism, since they’re not directly providing patient care. But if insurance companies thought they could do a better job of negotiating prices, they’d have already taken on that role themselves. And remember, the people who are suffering as a result of CVS Caremark’s decision aren’t the consumers—it’s the company that sells pills for profit. Pill Club will make a little less profit now, which is why it’s upset.

Most important for consumers is the fact that even if Pill Club decides to stop serving CVS Caremark customers, you will still be able to get your birth control delivered for free. There are multiple options for birth control delivery through CVS Caremark. Simple Health delivers birth control to all 50 states. (Like Pill Club, Simple Health doesn’t charge a delivery fee, but it does charge a $20 consultation fee to get started, which in 20 states can include getting a prescription for birth control if you don’t already have one. A spokesperson further told me by Twitter it’s “quick to waive the fee for people based on personal need.”) PillPack, an Amazon company, also charges no delivery fee for customers who want prescriptions mailed to their door. It’s also in network with CVS Caremark, and its spokesperson told me by email that it expects to remain so.  And of course, CVS Caremark is happy to do the delivery itself—shipping is free with CVS Caremark’s mail-order delivery service, although it’s worth mentioning that CVS Pharmacy also runs same-day to two-day delivery service from individual pharmacy locations, where it charges rates up to $9.

If Simple Health, Pill Pack, and CVS Caremark’s own delivery services keep shipping birth control to customers’ doors for free, it’s hard to argue there’s a real issue of “access” here. When it comes to reproductive health, the outcomes will be the same whether the pills come from the Pill Club, CVS Caremark, or Santa Claus. Pill Club does include freebies like chocolate or organic tampons in its deliveries, which may be something consumers miss, but again, it’s not a health issue. But when it comes to the CVS–Pill Club fight, it’s really corporate profits, not women’s health, that’s on the line.

 

Filed under: General Problems