Pharmacy benefit managers, the secretive drug middlemen that pocket billions of dollars in kickbacks, were grilled this past week at a U.S. Senate Finance Committee hearing on drug prices.
Senators asked tough questions about what exactly PBMs do – and why pharmacy benefit managers hide behind secretive contracts that withhold information from patients.
“What I find surprising is that for as big of a role as PBM’s play, we know surprisingly little about how they operate,” said U.S. Senator John Cornyn of Texas. “The terms of these rebates, including dollar amounts and incentives are cloaked in secrecy. Since there’s no paper trail or standard procedure on how these rebates or discounts are determined, it’s nearly impossible to follow the money.”
He added: “It should not take an advanced degree to figure out where your money is going when you buy your prescription drugs.”
The Big Story: PBM Denials
But, while executives at Express Scripts, CVS Caremark, Humana, Optum and Prime Therapeutics struggled to explain their secretive practices, lawmakers largely ignored the bigger issue with pharmacy benefit managers: PBMs’ systematic denials and discriminatory practices against patients living with chronic diseases and conditions.
“There was absolutely no mention of how PBM denial practices are affecting patients who cannot get treatments approved,” points out Terry Wilcox, co-founder and executive director at Patients Rising. “Many people think health insurance means patients are getting health care. For many patients who need it, they aren’t.”
The patient view was echoed by providers in oncology, who are frustrated by the role that PBMs play in blocking access to life-saving treatments.
“Good first hearing by Senate Finance Committee on #PBMs & their role in drug pricing,” tweeted Ted Okon, Executive Director of the Community Oncology Alliance, the country’s leading non-profit organization dedicated to advocating for community oncology practices. “But telling that not one Senator asked the #PBMs about their role in delaying & denying patients their drugs. That’s another #PBM black hole that needs oversight because real people being hurt.”
PBMS, which negotiate “behind closed doors,” are notorious for denying patients the treatment prescribed by their doctor. One such patient was Connie Raborn, a survivor of metastatic breast cancer and a double mastectomy.
When the 66-year-old patient from Louisiana was diagnosed with bone cancer, pharmacy benefit manager Express Scripts denied the prescription recommended by her doctor. It wasn’t a case of cut-rate health insurance – Raborn received coverage through Medicare with additional health coverage through her husband’s years of military service.
Despite fighting the denial, Raborn waited three months – a lifetime for anyone undergoing cancer treatment — until she finally received the treatment originally prescribed by her doctor.
“It’s a frequent problem in oncology,” Dr. David Oubre, Raborn’s oncologist told the Times-Picayune. “The more expensive the medication the more likely there will be a delay.”
Rebates Don’t Go to Patients
In addition to denying patients access to the treatments prescribed by their doctors, PBMs have been caught bilking taxpayers for hundreds of millions of dollars in inflated costs through spread pricing.
“We know they don’t pass those rebates on — or at least fully — to the consumers for whom they’re intended,” Jack Mozloom, vice president of advocacy communications at the National Community Pharmacists Association, told the Washington Post. “They’re basically scooping the savings off the top and keeping it for themselves, and that’s keeping the drug prices high.”
In Ohio, an explosive state-commissioned report found that pharmacy benefit managers had “billed taxpayers $223.7 million more for prescription drugs in a year than they reimbursed pharmacies to fill those prescriptions.” Ohio’s Department of Medicaid responded by ending the PBMs’ contracts with “spread pricing.”
“Pharmacy benefit managers refuse to disclose their secret contracts and big kickbacks,” says Terry Wilcox, co-founder and executive director at Patients Rising. “Patients need transparency that holds PBMs accountable.”
Sen. Debbie Stabenow to PBMs: Voluntarily Disclose “Egregious Anti-Consumer PBM Practices”
The loudest criticism of PBMs on Capitol Hill came from Sen. Debbie Stabenow of Michigan, who demanded that PBMs voluntarily disclose “egregious anti-consumer PBM practices taking place anywhere in your industry.”
“Are there any other egregious anti-consumer practices in your industry you’d like to highlight?” Senator Stabenow asked.
Stabenow’s tough questions followed as other lawmakers pondered aloud about what exactly PBMs do.
“[PBMs] are among the most profitable companies in the nation. What PBMs do to earn all those profits is a mystery,” said U.S. Senator Ron Wyden of Oregon. “”The deals they strike with drug makers and insurers are a mystery. How much they’re pocketing out of the rebates they negotiate is a mystery.”
Senator Chuck Grassley of Iowa, who chairs the Senate Finance Committee, acknowledged the need for greater transparency.
“Many consumers have very little insight into the workings of PBMs,” Senator Grassley said. “More transparency is needed. The current system is so opaque that it’s easy to see why there are many questions about PBMs’ motives and practices.”