PBMs: How to Make Billions Magically Appear

This topic contains 2 replies, has 3 voices, and was last updated by  stephaniet 1 month, 3 weeks ago.

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  • #12546

    Growing up I used to love a good magic trick? Making a bunny pop out of a top hat, or a woman disappearing from inside a seemingly impenetrable box. How did they do that? As an adult I still marvel at magic when I see it. In healthcare the greatest magic trick is happening right before our eyes, yet only a few can see it. Here’s the trick: how does a business that buys and sells pharmaceuticals that they do not make, for patients they will never meet, working for insurances who are losing billions, being paid for by people who can barely afford their premiums, copays, and co-insurance, or whose care is subsidized by the government, assumes no clinical liability for diagnosing or designing a patient treatment plans, how does that business earn BILLIONS of dollars while everyone else is barely surviving? Its magical! How does that business survive the ire of some of the biggest industry players? Referring to the world’s largest independent PBM a recent headline said: “Feds probing Express Scripts’ relationships with drugmakers, specialty pharmacies.” Another recent headline: “Anthem sues Express Scripts for $15 billion over drug pricing.” Who doesn’t love a good cat-fight, especially between industry giants. Yet, incredibly ESI is counter-suing Anthem for not negotiating in good faith…it’s magical.

    What is striking about all of this is that we’re talking about billions of dollars, billions!! Imagine a similar conversation between infusion center owners or doctors doing infusions in their offices. Does the word “billions” ever come out in conversation? No! We talk in terms of $10’s and $100’s of dollars, yet we’re the ones caring for the patient. Doctors don’t speak in billions and they’re the ones putting their professional credentials on the line, their very livelihood, diagnosing and treating the patient…they’re not making billions.

    The role of the PBMs is to negotiate drug prices for their plan-sponsor clients, like ESI is supposed to be doing for Anthem. Yet, Anthem is suing ESI for not producing the $500 to $700 million in savings they had promised. PBMs are also there to collect fees from plans for “controlling” formularies and prior authorizations for which they get paid by the health plans. They earn $40 or $50 per PA…yet they’re worth BILLIONS. Another recent headline, “OptumRx, a subsidiary of health insurance giant UnitedHealth Group, bought out Catamaran last year in a $12.8 billion deal.” Again, BILLIONS is part of the conversation. Anthem’s beef with ESI is about sharing the savings PBMs are there to earn for their plan-sponsors. Yet ESI hasn’t shared those savings with Anthem. Magically, their savings disappeared. Amazing!!

    Perhaps the problem is that the 3 largest PBMs OptumRX, ESI, and Caremark control 70 percent of the business. Where there is too little competition, where PBMs that are considerably larger than their customers, and has a built-in opaqueness that seems common to all PBMs, distrust, anger, and frustration reigns. So while the government is busy trying to keep the insurance companies from the hegemony of consolidating, like the Humana/Aetna deal and the near $50 billion Anthem/Cigna deal, both DOA earlier this month, the government seems oblivious to the hegemony of the PBMs.

    In their defense, PBMs provide a valuable service. But is it billions of dollars in value?

    #12671
     Pippy

    Very well written. Spot-on. Since the new admin took office in January, they continue to advertise to the public that insurers are losing money, etc. I’ve wondered repeatedly, they, and parties of like interest (biopharma) have millions to lobby, what is transparent is more money is directed to WA. Why aren’t these gaps of billions brought to the attention of the public? The tax cuts would undoubtedly go to those raking in the billions, but won’t their profit margins reduce by eliminating access to healthcare, via proposed AHCA?
    When researching Express Script, they have a lot of funding in WA. What are they willing to lose, by kicking those off of insurance? When healthcare, as stands now, supports their billions in profits. You mention Aetna, and I am trying to put these pieces together. What was humannas reasoning for pulling out of exchanges? Its no doubt, related to what the author writes. I perceived it as a political move. The lack of funding, apart from the reserves being withheld from insurers, would seem to be this magical amount of billions pocketed by the PBMs.
    What is embarrassing to the politicians, who gather their information from the lobbiest, it appears. Is that what they publically proclaim, is anything but what the real citizen experiences on a daily basis with navigating the insurance companies, medications, and so on.
    By the same token, is it possible, that the PBMs are the ones funding paul Ryan’s campaign? Everyone knows this funding is landing somewhere, yes in Washington. There is more to it, would be nice if the politicians educated themselves on this article, as they may have a different perspective.

    #17372

    Thanks for the article, Don. From an office perspective in the Kansas City market, the latest push to PBM’s has unexpectedly come from BCBSKC. The use of MedTrakRx has been the cause of extremely slow drug claim pay with our Cerner patients, and now we’ll have an even greater patient population whose claims are slow. And if PBMs are supposed to save the insurance carrier money, I’m sure we’d love to get paid what the PBM will get for the drugs! For the most part, our office has refused Specialty Pharmacy and PBM directives (except for long term patients of ours who have had to change) and we generally send new patients out to other centers. Now it looks like we are going to have to come to terms with the ever changing insurance plans which means we will have to spend more money to cover more office help and perhaps some new computer programs. Seems like the little guys are the ones who suffer most!

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