Regulators and Politicians Wanted Data. After Seeing Some of It, They Want More.
Pharmacy providers, employer groups, and patient advocates alike have been beating the drum on potential arbitrage occurring with pharmacy benefit managers (PBMs) while government administrators, legislators, and human resources managers have begun to question why drug expenditures continue to rise, even in the face of generic deflation and reduced reimbursement rates. “Just look at the data!” seems to be the refrain from the pharmacy world, where pharmacies can compare what they have paid and what they are reimbursed. Add in what the plan sponsor or taxpayer has paid the PBM, and any student in first-year accounting begins to scratch their head. Data that connect the dots have started to flow in an industry that wields its will through lack of transparency. The Columbus Dispatch had a multiyear series of Medicaid focused articles that described the fight for visibility into who pays whom how much. This series resulted in Ohio carving out the pharmacy benefit from the traditional managed care outsourcing.1
This lack of transparency is by design. It is purposeful to achieve price discrimination, wherein some third parties pay less (Medicaid) and others pay more (commercial). Price discrimination is not unique to health care and can be used legitimately to improve a marketplace or quasi-public utility. Notably, in order to pull off price discrimination successfully, a bit of “hide the cheese” is necessary. However, health care takes this strategy to another level across all lines of service, including pharmacy.
Before you blame the PBMs for this approach, whose primary business model is enabled by the rebate game, have a discussion with your legislators about the Medicaid Drug Rebate Program, wherein a deal was hatched to avoid direct government negotiations with manufacturers. To enable purposeful and government-imposed price discrimination, a system was devised to ensure that Medicaid paid the lowest price. The mechanism to pull that off? Rebates, of course. From there, the spreadsheet wars ensued across all payer types and payers, with spread pricing and other opacities to follow. The dearth of transparency in the pharmacy sector wasn’t invented by the PBMs, but rather manufacturers and politicians, and it has eventually and inevitably gotten out of control.
About the Author
Troy Trygstad, PharmD, PhD, MBA, is the executive director of CPESN USA, a clinically integrated network of more than 3500 participating pharmacies. He received his PharmD and MBA degrees from Drake University and a PhD in pharmaceutical outcomes and policy from the University of North Carolina. He has recently served on the board of directors for the Pharmacy Quality Alliance and the American Pharmacists Association Foundation. He also proudly practiced in community pharmacies across the state of North Carolina for 17 years.
Wait…What? Express Scripts Stops Filling GLP-1s for New Patients
In December, Express Scripts announced it would no longer fill glucagon-like peptide-1 receptor (GLP-1) agonist medications for new-to-therapy members.2 When I read this headline, I paused and thought to myself, “Wait…what?” We know that mail-order operations are profitable to PBMs. Aside from the sheer volume they provide these businesses in terms of prescription fills, they have incredible purchasing power on the buy side and access to data to ensure operations, sales, and channeling are in an optimal position in the marketplace. So why stop filling the fastest growing, most clinically significant class of medications in a generation (or 2)? Maybe it has to do with data?
Mississippi Publishes Some Interesting Findings
Mississippi recently released a short but eye-opening 2-page report that posited that affiliated pharmacies (essentially the wholly owned and operated mail-order outfits) were reimbursed quite a bit more than community-based pharmacies.3 It also claimed that there were 49 different maximum allowable cost lists used in the state and said that zero-balance claims, in which the insurer paid $0 to the pharmacy for the claim, were much higher with community based pharmacies than PBM-affiliated pharmacies. Of course, the ensuing press was less than kind to the PBMs, and the PBMs have a right to respond—as they should—and offer data countering those conclusions. But the state was able to see and report on the data, and it was empowering. This is likely to become a trend following Ohio’s fallout from carving out the pharmacy benefit from traditional managed care outsourcing.
