“We live in the USA where self-dealing has reached new heights in the Pharmacy Benefit Market. PBN’s enjoy manipulative pricing, spread pricing, rebates disguised as fees, the gagging of pharmacies to tell you of better purchasing options than the PBN’s; as well as internal rebates and fees designed to evade Employer contracts (that would lead to racketeering and corruption charges in any other industry).
In “PBN world”, unbridled greed and misrepresentation have become the norm. There is a reason why the medical industry has become close to 20% of GDP, and those reasons are becoming more and more visible to those paying the bills. If you think that this is outrageous, you are absolutely correct and even the Democrats can agree with the Republicans on this. This article just scratches the surface of what is going on, but it is a good start.”
By: Paul Finestone, Insurance Consultant and Client Advocate
A recent congressional hearing on the high cost of insulin may have helped bring bipartisan harmony to part of the House Energy and Commerce Committee. Witnesses from pharmacy benefits managers (PBMs) and drug companies made at least some Republican lawmakers at the hearing so angry that the Republicans started talking about their common ground with the Democrats. Rep. Earl “Buddy” Carter, R-Ga., pointed out that three of the PBM witnesses — Thomas Moriarty of CVS Health, Amy Bricker of Express Scripts, and Dr. Sumit Dutta of OptumRx — are affiliated with health insurer-PBM combinations. CVS Health now owns Aetna Inc., Cigna Corp. now owns Express Scripts, and UnitedHealth Group Inc. owns OptumRx. PBMs help health insurers, employersponsored health plans and other payers buy drugs. They negotiate the actual prices the clients’ pay with the drug makers and distributors.
Carter, who owns Carter’s Pharmacy Inc., said insurer-PBM integration gives PBMs an incentive keeps the list price for a drug like insulin high, so that the PBM can send back a portion of the money back to the health insurer. “Essentially,” Carter said, “you’re the PBM managing the money, and you’re sending the money back to another company that you own.” Carter told the witnesses they had helped highlight the dangers of vertical integration. “I want to congratulate all of you,” Carter said. “You’ve done something here today that we’ve been trying to do in Congress since the four years and three months that I’ve been here. And that is to create bipartisanship. Because, what you’ve witnessed here today is bipartisanship. What you have witnessed here today is bipartisanship. This is going to end. I have witnessed what you’ve done. I have seen what you have done with the PBMs.” Carter said Republicans will help make sure that Centers for Medicare and Medicaid Services (CMS) Medicare drug plan price disclosure and rebate proposals take effect. Carter and the witnesses appeared Wednesday at a hearing organized by the House Energy and Commerce Committee’s oversight subcommittee.
Rep. Diana DeGette, D-Colo., the subcommittee chair, smiled after Carter finished. “I never thought I’d see the day when Buddy Carter was channeling Jan Schakowsky,” DeGette joked, referring to Rep. Janice Schakowsky, D-Ill., who is typically at odds with Carter during House hearings. The oversight subcommittee held another hearing on insulin prices a week earlier.
The witnesses at the first hearing were patients, caregivers and health policy researchers.
Most of the witnesses at the hearing held Wednesday talked about the fact that health insurers pay most of the cost of insulin for most patients who use insulin, and that drug makers and other organizations offer special programs to help low-income people without health insurance pay for insulin. DeGette said that the full price of drugs still matters to people to many people who lack coverage, or who have coverage gaps. DeGette said her 25-year-old daughter, Francesca, has Type 1 diabetes.
Francesca recently filled a prescription for a type of insulin with a list price of $1739.78. The receipt showed that the insurer had negotiated the price it actually paid down to $347.80. Francesca “didn’t pay that, because she’s on insurance, but she’s still paid quite a bit, because I have a pretty high deductible,” DeGette said. “Everybody’s saying, ‘Well sure, the list price is high, but there’s all these work arounds. ‘But not everybody gets the work arounds.
The List Price v. the Net Price
PBMs and pharmaceutical companies may have efforts to get cheaper insulin to people with coverage gaps, but those efforts are a temporary bandage, not a real solution to the insulin cost problem, DeGette said DeGette said the pharmaceutical companies had $328 billion in profits in 2018, and the PBMs had $23 billion in 2018 profits.
“Everybody’s making a profit,” DeGette said. “And the people who are really suffering here are the people who either have to pay a list price or even after their deductible have to pay an unacceptable price. And nobody here in this room wants that. So what we’re going to do, we’re going to get together in a bipartisan way, and we’ re going to work with all of you plus everybody else in the distribution center to figure out how we can provide insulin to diabetics at a cost that they can afford. And we’re going to do that as quickly as we can.”
A Progressive Report Hearing
The oversight committee will bring industry witnesses back for another hearing in July or September, to talk about the progress industry players have made at making cheaper insulin available, DeGette said. “This is not optional,” DeGette said. “It is going to happen.”
By: Paul Finestone, Insurance Consultant and Client Advocate 747-233-4805