Marion Mass, M.D. and Christina Dewey, M.D.
Would you like to lower healthcare costs, restore quality and improve choice? Yes? Then you MUST learn about Pharmacy Benefit Managers (PBMs).
If you look on the Fortune 500 top 12 companies, you will find three companies who own PBM. Dig deeper, and you’ll discover these companies are CVS health, who owns the PBM CVS Caremark, United Healthcare who owns the PBM Optum Rx, and Cigna, who owns the PBM Express Scripts. These three PBM control 85% of the prescription drug market, and are the biggest revenue generators for their parent companies.
For example, when the insurance company Cigna, purchased Express Scripts in 2019, their revenues tripled. Take a peek under the hood of CVS Health, and you will discover that CVS’s PBM CVS Caremark is, to put it frankly, its prize cash cow, its biggest source of revenue. Moo.
Until recently, many Americans had no idea what a PBM was, and blamed insurance and pharma and physicians for the high cost of care. The truth is much more complicated, and those making the money don’t want you to pull the mask off the villain of high healthcare costs. They aim to prevent the Scooby Doo denouement and keep Americans from discovering the biggest, richest, most devious villains in the healthcare space are the PBM.
Some really important clues to why we should suspect that the PBM are villainous profiteers:
– The PBM and insurance companies now own one another, and some, like the CVS Health empire, also own pharmacy chains
– The PBM controls the pharmaceutical companies, by creating the formularies, aka the list of medications that the insurance companies will “cover”. Physicians play no part, nor have any say in this choice.
– The PBM can collect legalized kickbacks, called ‘rebates’ from pharmaceutical companies because the PBM were granted an exemption from the anti-kickback statute in 2003 by GW Bush’s HHS secretary. This anti-kickback exemption allows pharmaceutical companies to simply pay for placement on the formulary. Americans are not necessarily getting the best medication, but the best med a legal bribe can buy.
– There is no transparency for these kickbacks (aka rebates) but sources have revealed that in 2020, the total amount of kickbacks approached $200 BILLION (yes with a B).
– PBM like CVS Caremark are now facing charges of preventing elderly Medicare patients, including those with End Stage Kidney Failure from access to affordable life sparing medications.
– In multiple states, PBM have been found to be helping themselves to Medicaid money… not a small helping, either: In Ohio alone, the PBM subsidiary of Centene as well as CVS and Optum were pocketing $244million per year.
– The big PBM that own pharmacies, like CVS are utilizing shady practices to put trusted Mom and Pop pharmacies out of business.
– In an NBC News exclusive with Cynthia McFadden, the PBM mail order pharmacies were found to be delivering ineffective medications. One young pediatric patient with cystic fibrosis was hospitalized after wasting away because of medications delivered by PBM giant Express Scripts, whose agent pooh poohed the concerns of the patient’s mother.
Do you need to hear more?
Yes, you need to understand who is granting more favors to the behemoth companies responsible for the maleficent behavior noted above.
Let’s look at several recent congressional bills in chronological order of passage.
The Affordable Insulin Now Act was passed by the House and Lingers in the senate
Although those who support the bill claim to have lowered the cost of insulin, Lloyd Dogget, a Texas Democrat correctly stated that the bill does not lower the cost of insulin by even a penny. He’s correct. It lowers the co-pay, but the uninsured, and those who pay insurance ( whether they be employer or independent purchaser) will continue to pay the full bloated cost of insulin, 80% of which is flowing to the PBM via kickbacks and fees. In other words, this bill simply ensures that the taxpayers keep paying the PBM in the form of kickbacks.
Worse yet, the bill grants a delay of the rebate rule for PBM. The rebate rule was an Executive Order introduced in 2020 and demanded that the kickbacks (aka rebates) would flow to the patient at the point of sale and not the PBM and the insurers. PBMs are continually telling Americans that they pass on the rebates, yet when the rebate rule was suggested, they have threatened to increase Medicare premiums as soon as the rule is enacted.
Congress has discovered they can pull the entirely disingenuous accounting sleight of hand of delaying the rebate rule (in other words, allowing the PBM to keep collecting their kickbacks and not forcing them to pass on to patients) and thereby claiming that they are saving money by preventing Medicare premium increases. To put another way, the PBM’s and Insurers are playing Chicken with the rebate rule by threatening Medicare premium increases, and the Congress-people that delay the rebate rule are taking the bait. I suppose that makes them lower than chickens in the game. Perhaps they are simply chicken….. oh, never mind. Maybe they simply don’t understand.
The insulin Bill was not the first time Congress delayed the rebate rule. Apparently they did it in the infrastructure bill, too. Howard Dean, a physician and former presidential candidate called them on it in Newsweek, even pointing out that the rebate rule was solid, and potentially the best thing to come from the Trump Presidency.
Based on the above, we ought to let that insulin bill die and come up with a real way to lower insulin costs.
The recent Gun Bill Passed by the Senate and House and signed into law sneaked in a gift to PBMs.
Why on earth would a bill on guns contain another delay in the rebate rule, yet another gift to the PBM industry? The same faulty accounting gimmick of using the rebate rule delay as a pay for. Unbelievable. Senators Chris Murphy, D-CT and John Cornyn, R-Tx are mum about who put the PBM poison pork into the gun bill. Interestingly, Murphy’s top donor is the law firm that helps CVS negotiate mergers. And Cornyn is a top taker from Vizient, a hospital Middleman Group Purchasing Organization.
Good news at last! PBM reform in the Mental Health Package
Thankfully, some good news exists. . Some colossally INCREDIBLE news:
HR 7666, the bipartisan mental health bill introduced by Frank Pallone, D-NJ, and Cathy McMorris Rogers –R, Wa passed the house this week with 400 yay votes.
Some of us were really yelling ‘Yay’ when we discovered splendid section 602, quietly added by Rep Michael Burgess (R-Tx), mandating big time TRANSPARENCY for big PBM/Insurers with shocking penalties of $10K per day for non-compliance.
Requiring PBM transparency will save $2BILLION/10 years, paying for the bill. Billion with a ‘B’. As Mental health and substance abuse medications are largely overpriced due to PBM kickbacks, this provision absolutely belongs in the bill.
Americans will receive some wonderful services with this bill for Mental Health and Substance Use Disorders. Full detail can be found in the bill, but here is a screenshot of some of the high points
WE CANNOT STOP… we must make sure the mental health bill passes in the senate WITH PBM reform Intact.
Please CALL and EMAIL both of your US Senators ASAP, (find their numbers and email contact links here ) and tell them to PASS the Senate version of HR 7666 with the Burgess amendment to bring PBM transparency and accountability intact. Ask your friends to call. Ask your neighbors to call. Ask everyone in your circle and beyond. Tell YOUR Senators you now know the PBMs are behind the ever increasing healthcare costs and it’s time for Congress to listen to we the people and not the profiteering villainous Pharmacy Benefit Managers!
Drs. Mass and Dewey are proud to be pediatricians for over 20 years each and fierce advocates for patients and physicians!
Dr. Mass, graduated from Duke Medical School and trained at Northwestern. She has practiced in the Philadelphia area. She’s a cofounder of Practicing Physicians of America And leadership in Free To Care .
Dr. Dewey attended Loyola University Stritch School of Medicine . She did a year of surgery internship then two years of pediatric surgery research before training in Pediatrics at University of Minnesota. She is founder and CEO of Peds Mama Doc and has published in multiple outlets