The story in the Sunday Journal Star, “Sworn to secrecy, drugstores stay silent as customers overpay,” cited examples in other states, but the same thing is happening in Nebraska. It’s a nationwide problem.
At the heart of the controversy is the giant pharmacy benefit management industry — perhaps the largest industry of which you have never heard, even though it has companies that are larger than some household names like Pepsi, Coca-Cola and Boeing.
As reported in the Bloomberg News story by Jared Hopkins, some of the pharmacy benefit management companies require pharmacists to sign contracts which prevent them from telling customers when it would be cheaper to pay for the prescription out of pocket, rather than using insurance and paying the co-pay.
In one case in Ohio, Bloomberg reported, a pharmacist paid $2.05 for 15 milligrams of the generic stomach disorder drug pantoprazole. The customer paid $15, of which $7.78 went to the benefit manager and $7.22 to the pharmacist.
The money that went back to the benefit manager is called a clawback. “I’ve got three drugstores, so I see a lot of it," Houston pharmacist David Spence told Bloomberg. “We look at it as theft — another way for the PBMs to steal.”
Three benefit companies process 80 percent of the prescriptions in the United States. They are OptumRx, Express Scripts Holding Co. and CVS Caremark.
Pharmacy benefit managers started out as claims processors in the 1970s. Now they are giants with power over prescription drug pricing, including which drugs are covered by plans, which pharmacies patients can use and how much drugs cost.
In the past two years alone the industry has grown from $300 billion to $380 billion, one PBM company told the Dayton (Ohio) Daily News, which has reported on the industry.
Pharmacy benefit managers argue that with millions of patients they drive competition that saves money for employers. Express Scripts, for example, represents 85 million members of 3,000 health plans, according to the company.
If the PBMs are saving consumers money, consumers really have to accept the claim on faith. The pharmaceutical business is so complex and willfully opaque that few except industry insiders can separate truth from reality. In the long term the issues may be sorted out in court. The industry is facing a wave of lawsuits.
In the short term a few states have passed laws to allow or even require local pharmacists to reveal when a consumer could save money by paying for the prescription out of pocket rather than using insurance and paying the co-pay. If Nebraska officials want to do something to help consumers, that seems like a good place to start.