PBMs: The Invisible Players Prioritizing Profits Over Patients

Trump voters, Bernie Sanders supporters, and millions of Americans elsewhere on the political spectrum agree: prescription drugs are too expensive.

At pharmacy counters across the country, people are shocked by the cost of their medication. Many are forced to go without critical, even lifesaving, treatments because they cannot afford the copay. Endless data exists to illustrate the severity of the problem and situations like the EpiPen scandal further stoke the public’s anger. In all the discussions about drug pricing, however, one player manages to remain impervious and invisible: pharmacy benefit managers (PBMs). We all know that pharmaceutical manufacturers are to blame but who knew that there is another entity with nearly equal culpability.

Introducing PBMs

Ever heard of Express Scripts, CVS Caremark, or OptumRx? They are the three largest PBMs in the United States. Together they control between 80 and 85 percent of the market, and likely your prescription drug benefits. Most people are unaware of PBMs, and PBMs want to keep it that way.

PBMs are hired by insurance companies to dictate which medicines will be covered, when doctors can prescribe them, and how much the copay will be. They can even prevent pharmacists from disclosing to consumers how to bypass insurance to pay less for their medication. PBMs were created decades ago to save money by negotiating with drug manufacturers. Today, providers and patient advocates like myself feel powerless as they drain money from the healthcare system and make prescription drugs less accessible.

Spiraling Rebates

A rebate is a chunk of money that a drugmaker agrees to pay a PBM each time a certain prescription is filled. Manufacturers compete for coveted spots on PBM formularies – the list of drugs that the PBM will cover. The drugmakers willing to pay the highest rebates are given preferential positions on formularies.

The formula for determining rebates is: Rebate = List price x % discount x # of scripts filled. The higher the list price, the higher the PBM’s rebate, and therefore, the higher the likelihood that the drug is given a top spot on their formulary. Patients, however, pay a percentage of the list price, not what the PBM ultimately paid for the drug. This equation drives up list prices at the expense of patients.

Shifting Formularies

Formularies are not derived based on scientific evidence of a drug’s effectiveness, safety, or even price. They are solely structured to reap maximum profits for PBMs – which do no research, see no patients, and take no liability if the drug they insist doctors use harms a patient.

Every six months to a year, PBMs update their formularies. Formulary changes often force patients to switch medications, not for medical reasons but to make their PBM more money. This phenomenon is called non-medical switching. In my own practice, I have seen patients search for the right medication to treat their rheumatoid arthritis for over a year only to be suddenly denied the treatment by their insurance.

Prioritizing Profits Over Patients

In conclusion, the PBM model is structured to prioritize the interests of PBMs over the health of patients. The drug pricing system in the U.S. is complex and opaque, which has allowed PBMs to operate unchecked and unchallenged for far too long. PBMs claim to save the healthcare system money. If this is true, why are drug prices and premiums rising as PBM profits skyrocket into the hundreds of billions? With the healthcare of millions of people at stake, we must hold PBMs accountable in addition to the drug makers. "A pox on both your houses"

I am a member of a recently formed coalition that aims to pull back the curtain on PBMs. The Alliance for Transparent and Affordable Prescriptions (ATAP) is composed of patient and provider groups concerned about the role of PBMs in driving up drug prices. The members are fed up with PBMs standing between patients and their medications. Join us in spreading the word about PBMs and demanding more transparency in the drug pricing system by visiting www.ATAPAdvocates.com.

Dr. Madelaine Feldman is a practicing rheumatologist in New Orleans, Louisiana. She is a founding member and past president of the Rheumatology Alliance of Louisiana, Vice President of the Coalition of State Rheumatology Organizations, as well as a member of several other rheumatology associations. Dr. Feldman is a Clinical Associate Professor of Medicine at Tulane University School of Medicine and has been named one of the Top Doctors in New Orleans for over 10 years.