What is the Major Contributing Factor to the High Costs of Your Prescription Medications?

By N. Lois Adams, Consultant Pharmacist, MBA, HHCS HEALTH GROUP OF COMPANIES, LLC.

Have you ever heard of the “PBMs”?  No?  Well join the huge group of people- seniors, employers, workers-who look at me with the thousand- foot, stare in their eyes when I mention that term. I almost always get the answer. NO, what is that.

They, my friend, are the Prescription Benefits Managers or PBMs.. entities who have taken over a great part of the delivery of health care and have caused the prices to escalate upwards dramatically.

These entities started out as companies which only processed pharmacy prescription claims for insurance companies for you, the employee, the consumer, and any other person who received medicine which had to be billed to an insurance company so that they would receive reimbursement. Now they have morphed into gigantic entities which make billions of dollars at yours, the employers, the government entities, and others expense. They are no longer in the background of medicine. They are running many parts of it. 

They started out by touting that they ( the PBMs) would save all of us money.  They convinced the insurers that they could save money by establishing drug formularies whereby they divided medical problems into categories and developed drug lists which allegedly would contain necessary drugs in each category so that the physician could choose one of those to treat his or her patient. This was a beginning in medical practice whereby the physician could only choose a drug that was on “their” formulary in “their” designated category- no matter if that was the drug of choice to treat the disease or not. And how, in many cases, did they choose the drug in each category? Well, simple. They selected those drugs from manufacturers who gave them the largest rebates. It may not be the best drug for that particular condition but it was the only one “their” formulary would permit.

Then came the “Prior Authorization” (P.A) debacle which is the bain of the physician’s office staff’s existence. As a practicing pharmacist for over 50 years and the owner of pharmacy entities, I have interviewed people for employment at my organizations who have told me that most of those people who are engaged with giving decisions as to whether you need the drug or not, have no idea what the professional is asking them. They are , in many cases, only following a script and do not have any knowledge or training in medicine, the disease, pharmacology, etc. regarding the question as to whether the drug should be approved so that the physician may prescribe it..And the insurer can pay for it. It became my practice, if I was denied, to ask to speak with their Medical Director because “he had to be licensed somewhere.” This was only because the ill-informed gatekeeper would end the inquiry there and not allow any further questioning.

Their “off shore” offices were another step in obstruction. I was told that they would get back with me-perhaps in 2 weeks. My patient needed the medication and that was not sufficient. The next step was to “demand” that I be transferred back to the United States and I allowed  to speak with their medical director.  That usually was successful. The issue here also is that many office personnel or health care companies do not understand the lengths to which one must go to get approval and then what happens in that situation.? You get improper or inferior medical treatment.

It is necessary to enlighten my readers to let them know that the entire system and quality is based upon the number and amount of the rebates given by the pharmaceutical industry to the PBMs. Your doctor can no longer practice medicine in the way that he knows best…he has to engage the PBMs for permission to use the drug of choice. That is where we are today. It is “medicine by rebate”. I sincerely hope that our President will understand who the real culprit of rising medication costs is and take action to rescind the “Safe Harbor” laws so that the PBMs can no longer hide behind laws and regulations that only serve as a “Safe Harbor” for them…and certainly not for you and me.

I will be giving you more insight on the high cost of prescriptions for you and your family in a following column.  Please address any of your questions to me at , “ASK YOUR PHARMACIST”   Newsletter @AmacFoundation.org

Amazon Rx: a cure for supply chain kickbacks or just another poison pill?

Amazon is throwing its hat into the pharmacy business and Bob Campbell, MD of Physicians Against Drug Shortages weighs in on what this could mean:

The Amazon folks do not show their cards. When this began it was called the 1492 Project before it was reported by the press. I have asked them directly are you trying to undercut the GPO/PBM supply chain or do you just want to get in on the kickbacks? They didn’t say then and they don’t say now.

Some insights…they hired a ton of people from the GPO industry presumably to understand the supply chain dynamics.

Their initial focus was the hospital supply chain but they subsequently backed down from that publicly due to the “special relationships” of GPO and Hospital entities. Now their focus is the outpatient pharmaceuticals.

I have maintained that Amazon is the only non governmental entity with the scale and resources to create a parallel competitive marketplace as an alternative to the normal anticompetitive market. Still they will never dominate only survive and carve out a niche. The easier more lucrative approach would be to collect kickbacks. Amazon is different enough they may do the right thing. The Bezos model is your margin is our opportunity. The 43% Kickback rate in outpatient Pharma plus the usual participant margins makes for a fat gross margin to target.

Until Amazon says what they are really up to we can only speculate.

Forget Pens, How About Banning Kickbacks?

Back in 2008 the Pharmaceutical industry ostensibly took the high road and called for a moratorium on branded items handed out to doctors. No more free pens. Then in 2010 the Physician Payment Sunshine Act cemented in place red tape impeding other gifts to physicians. No more free lunches … with out filling out a form for Uncle Sam.

Well the truth is: “We’ve got big problems in health care, and I don’t think the problem is pens,” stated Houston physician Stephen Lapin, MD, speaking what was on the mind of virtually, if not literally, every physician.

These changes didn’t accomplish much if anything but a few warm fuzzy feelings for politicians, while the folks in C-Suites likely congratulated each other with a slap on the back for yet again shifting the blame onto doctors and covering up their own corruption.

This time doctors are fighting back and asking for real change, change with the potential to save patients to the tune of $100 billion dollars. How? By axing out the Pharmaceutical industry kickbacks being used to bribe the middlemen in control of American’s pharmaceutical benefits.

Your action is needed by July 16 to help end these improper bribes that are driving up costs, creating shortages, and controlling the prescriptions covered by your plan.

Speaking out is easy and instructions can be found here: https://aapsonline.org/alert-and-special-legislative-update-pharmacy-benefits-managers/.

 

Can a Former Pharma Insider Solve Sky High Rx Costs?

HHS Secretary Alex Azar talked a good game in a Rose Garden ceremony and subsequent press conference—held Friday, May 11—on Trump Administration efforts to lower prescription drug costs for American patients.

Azar is, of course, a former executive of Eli Lilly. Can he be trusted to champion the interests of everyday Americans?

We will soon find out.  President Trump stated that Sec. Azar’s insider knowledge about the complex schemes to raise prices, perpetrated by industry middlemen, is exactly what makes him the right person for the job.

Watch the video of the Rose Garden Ceremony:

Although groups like Physicians Against Drug Shortages have been sounding the alarm for years, industry-led smoke and mirrors have, until recently, largely flown under the radar of the main-stream-media. Thankfully, respected outlets like the Wall Street Journal and Washington Times are now beginning to shine needed light on this malfeasance.

As these articles explain, a safe harbor to Medicare anti-kickback law is the major policy failure enabling the bad actors to line their pockets by driving up costs. The safe harbor legalizes kickbacks paid by manufacturers to Pharmacy Benefit Managers (PBMs) and their cousins-in-crime Group Purchasing Organizations (GPOs).

TownHall.com reports: Repealing the GPO/PBM safe harbor to Medicare anti-kickback law “would open the drug and medical supply segment of healthcare to free market competition and foster innovation. In addition, it would result in cost reductions estimated at $100 billion [actually more like $200 billion], including savings for the Medicare and Medicaid programs.”

Congress initially enacted the GPO safe harbor in 1986. Then in 1987 Congress reaffirmed the measure, instructed HHS to implant the the safe harbor into regulation, and granted HHS authority to create additional safe harbors. In 2003 HHS OIG issued guidance clearing the way for PBMs to piggyback on the GPO safe harbor. Such guidance could theoretically be revised or rescinded by the HHS Secretary, without needing action by Congress.

And in their remarks today, both Trump and Azar mentioned that they will be looking at reining in such abusive practices.

Later in the press room, Azar explained that there are perverse incentives at play: “These big price increases are actually a good deal for pharmacy benefit managers, who are supposed to keep prices down.”

Video of White House Press Conference With Sec. Azar:

What is HHS going to do? They put out a 44-page blueprint of their plan:

https://www.hhs.gov/sites/default/files/AmericanPatientsFirst.pdf

One step HHS announced it will implement immediately is a prohibition of Part D gag clauses, “preventing pharmacists’ telling patients when they could pay less out-of-pocket by not using insurance.”

Great words but let’s hope HHS doesn’t stop there. The blueprint is less clear about other action HHS will take related to PBMs, although it states HHS is considering:  “Measures to restrict the use of rebates, including revisiting the safe harbor under the Anti-Kickback statute for drug rebate.”

Rebates? Why does CMS use that euphemism? They are not rebates, they are legalized kickbacks.  Furthermore, rebates do not go to the patients, they flow to the PBM and insurance companies.

Unfortunately, HHS has a poor track record when it comes to using it’s existing authority to stop PBM abuse. The Government Accountability Office reports: “since 2004, [HHS] has not routinely exercised its authority to request and review disclosures” that PBMs are required to make available to comply with the safe harbor.

HHS promises there will be an opportunity for the public to comment through a “Request for Information.”

HHS appears to be asking the right questions, including:

“Do PBM rebates and fees based on the percentage of the list price create an incentive to favor higher list prices (and the potential for higher rebates) rather than lower prices?”

and

“Should PBMs be obligated to act solely in the interest of the entity for whom they are managing pharmaceutical benefits? Should PBMs be forbidden from receiving any payment or remuneration from manufacturers, and should PBM contracts be forbidden from including rebates or fees calculated as a percentage of list prices? What effect would imposing this fiduciary duty on PBMs on behalf of the ultimate payer (i.e.,
consumers) have on PBMs’ ability to negotiate drug prices?”

When details become available about the comment opportunity we will ask that all patients and doctors demand that HHS take strong action to stop the PBM and GPO kickbacks.

Ultimately, as Trump stated in his comments, Congress will need to do it’s part in concert with administration actions.  One priority for Congress must be to repeal the GPO/PBM safe harbor and end legalized kickbacks.

In the meantime HHS can lead the way to educate Americans on how such repeal will save $200 billion dollars/year and prevent dangerous drug shortages.

Americans are depending on you to do the right thing, Secretary Azar.