Cracking Down on the 'Legal' Drug Cartel

Why does a 60-day supply of a chemo drug cost $17,000 at CVS (CVS), but just $72 at Mark Cuban's Cost Plus Drugs?

That's what a Congressional subcommittee demanded an answer to in recent hearings as it decided unanimously to crack down on pharmacy benefit managers ("PBMs").

I've been ranting about PBMs for years,?going way back ?to 2012, and more recently, in an?Empire Financial Daily?essay titled, "Scrutinizing the 'Legal' Drug Cartel " – when I wrote...

Talk about cartels... In the murky world of drug pricing, the PBMs are the middlemen – or as the FTC puts it, the "powerful middlemen."

It's great to see Congress?finally?take a peek, with a second hearing earlier this week, but realistically, jaded as I am, I doubt anything will come of it.

The PBM lobby is simply too powerful, and Congress is simply too divided and weak.

But that doesn't mean I plan to stop ranting...

If you don't know what PBMs are, you're not alone...

They're the middlemen between the pharmacies and the insurance companies. They also handle the distribution and sales of drugs for insurance companies and government programs, like Medicare.

They portray themselves as the good guys who help lower the cost of drugs.

But to most of us, they're just the opposite...

They're the entity that runs the "formularies" that decide which drugs are covered by your insurance plan. That means they have final say in what drugs are available to you, where you can pick them up, and what prices you pay for them.

If you're a pill popper, as I am, you've likely experienced some version of what I like to refer to as the "Formulary Follies."

That's when your doctor prescribes a drug, but then the pharmacy tells you that "it's not in the formulary." So your doctor then has to jump through hoops explaining why?that?drug is the right drug for you and should be covered. Then, even if it ultimately is, you might have to pay a big premium, because...?it's not in the formulary.

And get this: That formulary changes every year, thanks to all sorts of opaque backroom wheeling and dealing the PBMs have with the drug companies, which in turn causes havoc for many of us,?especially?those of us on Medicare. (If you're on Medicare, you might want to read my latest annual rant on that?here .)

It makes absolutely no sense, but there is little you or I can do about it.

Here's the crazy part...

The biggest PBMs are CVS Health's Caremark, Cigna's (CI) Express Scripts, and UnitedHealth's (UNH) OptumRx, which together control nearly 80% of the market.

The latter two are owned by insurance companies, while CVS owns an insurance company.

Talk about conflicts!

But wait, there’s more… (To read the rest please click here .)