Page 21

40113 ChoiceRx ePub long (1)

Expanding Role In fact the PBM industry is the largest mail-order operator. As the role and reach of these multi-billion dollar corporations expand they enjoy a unique and profitable position. The PBMs have the “advantage and authority to set drug prices for both their community pharmacy competitors and their own mail-order operations.”8 Since many PBMs own the mail-order prescription drug companies, the PBMs craft savvy, even if unfair, plans to secure more business for themselves. PBMs have a direct conflict of interest in that in many cases they own the mail-order prescription drug companies. PBMs obtain contracts with health insurance companies and entice them to use mail-order, offering the incentive of providing much lower co-pays if they do. In some cases, PBMs will charge no co-pays whatsoever for prescription drugs provided by mail-order. At the same time, PBMs will raise the copays for the same prescription drugs sold at a pharmacy. Often times Medicare Part D patients that choose to purchase their prescriptions at community pharmacies are forced to pay far higher co-pays. If the patients are not being charged co-pays on mail-order prescriptions, it appears they are saving money. The fact of the matter is someone, health insurance companies, still must pick up the tab for the costs of these drugs. Whether indirectly or not, taxpayers are the ones left on the hook to pay. The more a health insurance company must pay out for prescription costs – even for drugs patients may no longer need – the more everyone ends up paying for healthcare. For this reason alone, PBMs greatly contribute to higher insurance costs for consumers. The problem is PBMs and mail-order pharmacies have no incentive to change this behavior. The governmentprovided plans discussed earlier in this paper are continuing to pad PBMs’ coffers. As any businessman would agree, when you’re guaranteed business no matter what, you have no reason to improve your service, you’ll keep making money regardless. This also removes any incentives to innovate or implement cost saving measures because the business enjoys a captive market and is guaranteed a stream of business. That’s certainly proven to be the case for PBMs and mail-order, the problem is this leaves patients and taxpayers out in the cold. To put the issue succinctly, “PBMs hide the real prices of prescription drugs and charge their clients absurd markups for the same medicines. PBMs influence more than 80 percent of prescription drug coverage in the U.S. and administer drugs to more than 200 million Americans.”9 As a result, these corporations contribute significantly to increased health care costs for consumers in a health care insurance market that is already hostile. Lack of transparency One of the most disconcerting issues regarding PBMs is the lack of transparency rampant in their business practices. For example, “pharmaceutical benefit managers do not have to disclose how much of their price is for administrative costs, the total amount they receive in rebates or incentives from pharmaceutical manufacturers, or the basis of the price offered to OPM, such as the average wholesale price of the drugs.”10 Despite their lack of transparency, the companies are still able to ensure that they play a great role in increasing costs for FEHBP, and this means inevitably on the taxpayer. During a congressional hearing, Patrick McFarland, inspector general at the Office of Personnel Management had these thoughts to offer about 8. Schweers, Kevin. “Community pharmacists hear mail order complaints; debunk PBM myths.” The Hill, 21 Sept. 2009. Web. <http://thehill.com/blogs/congress-blog/healthcare/59593-community-pharmacists-hear-mail-order-complaints> 9. “FAQs.” Pharmacists United for Truth and Transparency. N.p., n.d. Web. 01 Feb. 2013 <http://www.truthrx.org/faqs/> 10. Parker, Alex M. “Lawmaker Pledges More Oversight of FEHBP Drug Costs.” - Pay & Benefits. Government Executive, 25 June 2009. Web. 01 Feb. 2013. <http://www.govexec.com/pay-benefits/2009/06/lawmaker-pledges-moreoversight of-fehbp-drug-costs/29436/> 21


40113 ChoiceRx ePub long (1)
To see the actual publication please follow the link above