- October 1, 2018
- Posted by: JPFarley
- Category: Pharmacy Benefit Managers
Pharmacy Benefit Managers (PBMs) say the reason they exist is to save health plans and members money. There are many who believe that the exact opposite is true, that they exist to extract money from the health system and divert it to themselves. That would put them among the many who have come to view health plans as “the pot of gold at the end of the rainbow” and explain why “getting your product or service covered” under health plans is a key to wealth beyond the imagination of most of us.
Both the U.S. House of Representatives and Senate now have bills under consideration with substantial support from both political parties to make it illegal for PBMs to have “Gag Clauses” in their contracts. A “Gag Clause ” is a provision that forbids a pharmacy from advising a patient/customer that a drug will cost them less out of pocket than their PBM card’s co-payment requirement.
For example, a drug card may have a $10 co-payment on all generic drugs while a particular generic blood pressure medication may only have a cost of $5. The pharmacist would be violating their PBM contract by telling their customer to pay cash instead of running it through the card and save $5.00. A University of South Carolina study showed that the drug actually cost less than the co-payment on 23% of scripts.
The reason that PBMs exist is to save health plans and members money. REALLY? This excess cost does not benefit the member, the plan, the drug manufacturer, or the pharmacy retailer. It only benefits the PBM. Not only that, it benefits the PBM in two ways. First, it obviously provides them revenue. Second, the PBM will use the $10 to offset other real charges when calculating guarantees. Finally, the plan needs to hire a PBM auditor to find the impact on the guarantee and then put up a prolonged fight to enforce the guarantee. We have been there and had to do that repeatedly. It’s considered “normal”. While its extra work it’s worth doing when you think about it involving 23% of scripts.
PBM’s are just one of the tools that are used by the many vendors of services to the health plan industry that have driven up the costs of health benefits for the past 50 years. This is why plan sponsors need to pay close attention to their ongoing expenditures and question items that just don’t “look right or sound right”. As a plan sponsor, you are probably right.