Paysign Inc.
07/29/2024 | News release | Distributed by Public on 07/29/2024 17:04
Five Takeaways From Government Investigations on PBMs
Probes Show That PBMs are the Culprits Driving Drug Costs and Overall Spend
On the heels of this month's scathing FTC Interim Staff Report1 on Pharmacy Benefit Managers (PBMs), the House Committee on Oversight and Accountability has released its own official report2 following a years-long investigation into the role played by PBMs, middlemen who negotiate drug prices on behalf of health plans and payers, in prescription drug markets. Unsurprisingly, their findings point to PBMs as the culprit in inflated prescription drug costs3, decreased patient access, and negative health outcomes. Here is our list of the 5 biggest revelations:
1. Evidence shows PBMs forced drug manufacturers to pay rebates in exchange for favorable formulary tier placement, making it difficult for generics and biosimilars to get on formularies.
• Evidence cited by the committee are emails from staff at Cigna Group's CI, Express Scripts, discouraging the discussion of utilizing lower-priced alternatives for Humira (an arthritis drug) which was priced around $90,000 per year, with the alternative drug being about half that price. When Humira faced competition from lower-priced medicines, the PBM's staff discouraged their account teams from discussing the alternatives with clients "due to rebate impact," according to Express Scripts emails cited by the House report.
• The FTC also found that PBMs negotiate manufacturer rebates4 that are expressly conditioned on limiting access to potentially lower cost generic alternatives."
2. The three largest PBMs have used their position as middlemen and integration with health insurers, pharmacies, providers, and recently manufacturers, to enact anticompetitive policies and protect their bottom line.
• Express Scripts sent messages advising that patients would pay more for a prescription if it was filled by their local pharmacy, but less for a three-month supply from the PBM's affiliated pharmacy. The committee wrote, "While this is made to appear to benefit the patient, what it is instead doing in practice, is limiting a patient's ability to choose their own pharmacy.
• Similarly, the FTC report stated that due to multiple mergers, acquisitions, and vertical integration, "the leading PBMs exercise significant power over Americans' access to drugs and the prices they pay."
3. PBMs frequently claim they provide savings for payers and patients through negotiation, drug utilization programs, and spread pricing, even though evidence has demonstrated they actually increase costs for patients and payers.
• When asked about the committee findings by the Wall Street Journal just last week, a spokesman representing PBMs from the Pharmaceutical Care Management Association hadn't seen the report but was quoted saying, "The critically important role of PBMs in our healthcare system in driving affordable access to prescription drugs is undeniable, saving patients and health plans $1,040 per person per year on drug costs," seemingly doubling down on their claim.
• The FTC report strongly accused PBMs of manipulating the drug supply chain to enrich themselves at the expense of patient care.
4. The three largest PBMs have begun creating foreign corporate entities and moving certain operations abroad to avoid transparency and evade proposed PBM reforms.
• Namely, group purchasing operations (GPO), including rebate negotiations, have moved to Switzerland, Ireland, and the Cayman Islands to manufacture and market high-profit generics or biosimilars5. These locations are notorious for their lack of financial transparency, making them a safe haven for those who wish to conceal their sources of revenue.
• The FTC also cited corporate restructuring, specifically into GPO organizations and rebate aggregators that operate outside the United States, as a big concern.
5. The use of prior authorizations, fail-first policies, and formulary manipulations by top PBMs has had significant detrimental impacts on Americans' health outcomes.
• PBMs' use of these tactics has slowed market uptake of cheaper generics and biosimilars, delayed patient care, and resulted in negative health impacts.
• The FTC report also cited evidence of PBMs' use of these methods to discourage utilization of generic drugs.
As we know from our research6, the pharmaceutical supply chain has been lacking in transparency for quite a long time. On top of copay accumulators and maximizers, insurer-affiliated PBMs, which now account for 80% or more of all prescription drug claims, have been able to get away with diverting obscene amounts of money away from patient care and into their own pockets.
Paysign has been an advocate for transparency within the pharmaceutical supply chain7, and the wider healthcare industry for years, and we are encouraged to see these bi-partisan committee and federal agency investigations expose evidence proving PBMs responsible for driving prescription price inflation, costing taxpayer dollars, and lowering the overall quality of care for patients. We greatly value our role helping pharmaceutical companies increase patient access to life-saving medications and therapies.
Read the full reports:
• The Role of Pharmacy Benefit Managers in Prescription Drug Markets
1. Trade Commission Staff, Federal. Washington, DC, 2024, pp. 1-73, Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.ftc.gov/system/files/ftc_gov/pdf/pharmacy-benefit-managers-staff-report.pdf
2. Oversight and Accountability, House Committee. The Role of Pharmacy Benefit Managers in Prescription Drug Markets, chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://oversight.house.gov/wp-content/uploads/2024/07/PBM-Report-FINAL-with-Redactions.pdf
3. "The False Promise of Current Drug Pricing Reforms." Paysign.Com, 28 Apr. 2022, https://paysign.com/the-false-promise-of-current-drug-pricing-reforms/
4. Trade Commission Staff, Federal. Washington, DC, 2024, pp. 1-73, Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.ftc.gov/system/files/ftc_gov/pdf/pharmacy-benefit-managers-staff-report.pdf
5. Oversight and Accountability, House Committee. The Role of Pharmacy Benefit Managers in Prescription Drug Markets, chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://oversight.house.gov/wp-content/uploads/2024/07/PBM-Report-FINAL-with-Redactions.pdf
6. "Powering the Convergence of Fintech and Healthcare." Paysign, Mar. 2024, paysign.com/rx.
7. Melchione, Logan. "Winning the Race for Patient Access: Identifying Copay Accumulator Impact." Drug Channels, Drug Channels, 24 Mar. 2023, www.drugchannels.net/2023/03/winning-race-for-patient-access.html