State must rein in PBMS to cut health care costs

America’s health care system sits at a crossroads of patient affordability and accessibility. With the cost of insurance premiums, doctor-visit copays and medications all increasing, patients are searching for sustainable solutions to their daily health-care needs. Often, this involves consulting their trusted local pharmacists to ensure that they are taking their medications correctly or to get over-the-counter medication to avoid an expensive trip to the doctor.

Unfortunately, these vital community health care resources are being exploited for larger commercial profits by a hidden part of the health care system: pharmacy benefit managers.

It is critical that Gov. Mike Dewine’s office focus on the bad actors that are preventing Ohio residents from getting the proper patient care they deserve, at a cost they can afford, by fighting for more transparency at the pharmacy counter.

In the past, PBMS served a useful and largely benign role as the middlemen that would administer prescription drug plans for corporations and insurance companies, working with drug manufacturers and local pharmacies. However, a 2015 report from Applied Policy found that in the past decade the role of PBMS has vastly expanded and touches nearly every aspect of the prescription drug marketplace.

Notably, the top three PBMS in our country (Optumrx, CVS Caremark and Express Scripts) now manage nearly 80 percent of the nation’s pharmacy benefit management. These companies use their market position and role within the industry to squeeze profits out of every step of the health care process.

PBMS’ expansive and complex nature allows them to collect huge profits while being able to largely dodge scrutiny from the government and media, while leaving pharmacies trying to defend their patients and themselves.

Thankfully, in Ohio, PBMS are starting to receive the careful eye they deserve. With improved cooperation from Dewine’s administration, Attorney General Dave Yost is fighting to recover $16 million in taxpayer dollars paid to pharmacy benefit manager Optumrx by the Bureau of Workers’ Compensation.

Yost alleges that the PBM pocketed this money from drug rebates, which were supposed to be passed on to BWC, by continuously overcharging the bureau and failing to adhere to agreed discounts on generic drugs.

This questionable practice is prevalent across Ohio’s health care spectrum. The state has five Medicaid managed-care plans that are handled by Optumrx and CVS Caremark. According to an audit, these two PBMS billed taxpayers 8.8 percent more than they paid pharmacies — keeping the $223.7 million difference for themselves. This was made possible through what is called “spread pricing,” a practice that is commonly used with generic drugs, where a network pharmacy is reimbursed one price while the insurance plan is charged a higher price for the same drug product.

The difference is then pocketed by the PBM. Not only does this bar pharmacies from revenue that could be used to better serve their patients, it also directly forces unnecessary costs on Ohio taxpayers. As a thirdgeneration pharmacist, I find this practice particularly troubling.

Perhaps even worse, PBMS sometimes included “gag orders” in contracts with pharmacies, preventing pharmacists from telling customers when their medication would be cheaper if they paid for it out of pocket instead of using their insurance copay. The Ohio Department of Insurance finally banned this practice last year.

Americans continue to spend more than they should for prescription drugs. The total amount spent in 2015 was $325 billion and has only increased since. Imagine if we could corral the PBMS and have them process claims like Visa and Mastercard do. We could leave the decisions to the doctors and pharmacists who have the patient’s best interest at heart. A reduction of just 10 percent would generate savings of around $35 billion.

The money spent on rebates, prior authorization and administration could be eliminated and with transparency the overall costs could be reduced. Imagine what would happen if we went back to a cash basis for medication. The market forces would drive the prices down to where the savings generated would enable those unable to afford medication to obtain it at no cost. I look forward to the continued discussion and improvement of care and cost to the American public.

It’s imperative that Dewine’s administration hold itself to a higher standard and continue to fight for increased transparency to fix our flawed health care system.