Taking on Pharmacy Benefit Managers

Imagine you are an independent pharmacist, an honest professional with a broad and deep understanding of pharmaceuticals that simply wants to help people and earn a nominal living. You lost all your maintenance drugs when managed care incented members to mail. Wal-Mart, CVS and Walgreens not only have multiple stores near you they have further acquired or built their own Pharmacy Benefit Managers's (PBM'S) so they can have both retail and a mail presence. You know the approximate ingredient cost for every drug in your inventory and over the last 15 years you have seen PBM's emerge. 15 years ago they did not exist and now the big 3 post huge profits. You have a pretty clear idea what type of business model produced these profits since a significant portion came from your margin. Perhaps you even grew up on a farm and where taught that pigs got fed, but hogs got slaughtered so you speak out (fulltext).

Pharmacy Group Testifies Before State Legislators to Increase Patient Protections, Regulate Giant Pharmacy Benefit Managers

ALEXANDRIA, Va. March 1 /PRNewswire-USNewswire/ -- In an effort to establish standards and provide better protection for patients, a representative from the National Community Pharmacists Association (NCPA) testified today before a committee of state legislators in support of model legislation that would force pharmacy benefit managers (PBMs), the largely unregulated corporations that administer the prescription drug benefit portion of health insurance plans for employers and unions, to end their deceptive business practices.


Reginia G. Benjamin, Esq., director of government affairs for NCPA, testified before the National Conference of Insurance Legislators' (NCOIL) Health, Long-Term Care, and Health Retirement Issues Committee in support of the Model Act Regarding Pharmacy Benefit Managers. The act would, among other things, require PBMs to pay pharmacy claims within 15 days, provide transparency regarding financial and drug utilization information, disclose incentives received for making drug substitutions, and pass on to the plan sponsors any rebates, payments, or benefits received from drug manufacturers. Currently, PBMs receive billions of dollars in rebates from drug manufacturers each year in return for dispensing higher-cost brand-name drugs but keep the majority of those rebates instead of passing them along to their clients.


"These drug 'middlemen' restrict consumers' choice and frequently and purposely switch patients to drugs that earn them higher rebates, even when cheaper and therapeutically similar or identical generic drugs are available," said NCPA President John Tilley, RPh, a pharmacy owner from Downey, Calif. "PBMs are robbing America's already strained health care system as a result of a lack of regulatory oversight, and that needs to change."

In addition to switching patients to medications that earn higher rebates, PBMs also limit patient treatment options by offering shrinking and shifting formularies, the lists of drugs that are covered for specific groups in a health insurance plan. PBMs often require excessively burdensome pre- authorization requirements in order to obtain refills or formulary-restricted medications, resulting in red tape and sometimes discouraging patients from trying to obtain their medications.

In most states, the business activities of PBMs are unregulated and unmonitored, in spite of numerous investigations into deceptive and anticompetitive business practices. PBMs regularly have faced litigation related to the federal False Claims Act, antitrust and unfair competition, deceptive practices, and their roles as fiduciaries. Some of those who have sued the PBMs include state attorneys general, unions and health plans, and the United States Department of Justice.

In her testimony before the committee, Benjamin cited a number of recent settlements and judgments against PBMs, including more than $378 million, not including interest, paid by two of the largest PBMs between 2004 and 2006 in cases involving deceptive business practices.

Remember in All the Presidents Men when Woodward and Bernstein are told by Deepthroat to "Follow the Money"? That advice seems quite appropriate to me as it relates to PBM behavior.

I would also pay attention to what you are hearing from the NCPA and Ms Benjamin because IMHO it is entirely accurate and on point. There are 8 states with legislation regulating PBMS and more with such laws under consideration.

Employers, stop and ask who developed your formulary?

If your PBM has been hired to control your pharmacy spend and works for you surely they would have arrived at a bullet proof process for putting the low cost in therapuetic class generics in the hands of your members right?

What percentage of the time does your PBM fill the low cost in therapuetic class generic drug?