PBM’s Earnings Lead To Higher Health Care Costs and Harm Patients

PBIRx®

Intelligent Solutions in Pharmacy Benefits

612 Wheelers Farms Road, Milford, CT 06461

(888) 797-2479

You are likely already aware that health care costs are continuing to rise, which naturally makes it more difficult for patients to receive the services they require. However, did you know that the actions and ultimately the earnings that PBMs take and make are two of the primary reasons for this? In fact, an article from the Wilson County News reports that “in 2012, the CEO of the nation’s largest pharmacy benefit manager, Express Scripts, earned about $1 million every week.” With an income so great on a weekly basis, let alone what individuals of this status earn every month and so on, it seems only fair to question where it all comes from.

A main reason that PBMs can achieve such high earnings is due to the fact that they refuse to pay for medications that patients require - the less they cover, the more money they keep in their pocket by preferring drug alternatives for which the PBM has negotiated significant rebates and fees that are NOT shared with the client. As they continue to deny coverage for certain drugs and services (here is a list of some drugs that PBMs CVS/Caremark and Express Scripts will be excluding in 2016), they also make it more expensive for patients to receive what they need. In turn, health care costs continue to rise across the board and, in some cases, patients get sicker when the out-of-pocket costs become too much to cover.

Though they are an important part of our health care system, you must realize that PBMs will go to great lengths for their own benefit, including the fact that they will keep rebates for themselves rather than pass them along to the rightful pharmacy or insurance provider - another reason their earnings are so high. As a result, we cannot stress enough how important it is for providing entities to have their pharmacy benefit contracts audited to ensure that the financial components of the Agreement are competitive today and that the PBM is complying with the terms within. At PBIRx, our number one priority is to keep our client’s PBM Agreement financial model continuously reviewed and negotiated so that they can enjoy the added savings versus the PBM increasing their profits.

Remember that PBMs renegotiate with their pharmacy network every year and benefit from new pricing. Clients however, negotiate their PBM Agreement once every 2-5 years and at year two or three it is the PBM that has benefited from any new pricing, not the Client.

If you suspect that your PBM is holding back rebates that you are entitled to, or if you simply want to have your contract audited to ensure that your plan is being carried out correctly, do not hesitate to give us a call at (888) 797-2479. 

For more information about our services and how YOU can take control over your health care costs, please visit us on our website today.

Do You Know The Games That Your PBM Plays Behind YOUR Back?

PBIRx®

Intelligent Solutions in Pharmacy Benefits

612 Wheelers Farms Road, Milford, CT 06461

(888) 797-2479

As an entity that provides pharmacy benefits to its employees or members, it is absolutely critical that you fully understand how your PBM operates after a deal has been made and your contract has been signed. Though you may feel confident that the terms and agreements proposed and negotiated will be upheld, it is not unusual for PBMs to fail to comply. Compliance failure can be due to several factors including lack of knowledge by not using pharmacy benefit consulting expertise, such as those provided by PBIRx, human error in setting up and modifying contractual details, system changes when PBMs merge or are acquired, etc. These compliance failures result in unnecessary increased costs as PBMs work to increase their own profitability.

Take the recent Novartis Kickback Scheme as an example. As reported in an article by the Wall Street Journal, allegations were made against Novartis for offering patient referrals to Accredo Health Group in exchange for encouraging refills of Exjade. Essentially, Novartis is claimed to have offered some type of financial benefit to the specialty pharmacy (which is run by Express Scripts) in order to boost sales of their products and therefore increase their profit.

Further explained in an article from BioPharmaDIVE, the arrangement between Novartis and Express Scripts is said to have lasted for four years (from 2008-2012) and caused Medicare, Medicaid and other similar programs to be "defrauded." Meaning, money was obtained illegally from these programs through the alleged deceiving actions of Novartis and the specialty pharmacy Accredo Health Group.

To put an end to the accusations, Express Scripts has officially agreed to pay $60 million dollars. But will will this be the last time a kickback scheme like this occurs?

Though unfortunate, it is important for all benefit providers to be aware of the possibility that their PBM is prioritizing the profits of the stockholders, versus lowering and managing the growing costs associated with the pharmacy benefit. That is why we place such an emphasis on auditing pharmacy benefit plans! By meeting with an expert team like PBIRx, entities can rest assured knowing that they are not falling victim to a scheme that is costing them more in the long run.

For more information about our pharmacy benefit auditing and consulting services, please visit www.pbirx.com or contact us at (888) 797-2479 today.