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Op-ed: The real culprit for high drug prices
[The Center Square] Teresa Dickinson
and Monique M. Whitney
Out here in Arizona,
there’s always been an appreciation for the old Wild West. It’s part of
our state’s character, as evidenced by popular tourist attractions like
Old Town Scottsdale or downtown Tombstone. Unfortunately, some
industries confuse the lawlessness of the Old West with the modern,
business-friendly environment of our great state, and use a shocking
lack of transparency to profit off the backs of hard-working Arizonan
residents and businesses – and there’s no better example than Pharmacy
Benefit Managers (aka PBMs). |
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 PBMs are middlemen who operate in the shadows between the drug
manufacturers and health insurance plans. They work without much, if any, state
or federal oversight, though efforts have been made on both levels to curb their
influence (notably, Senate Bill 1161 currently in the Arizona state
legislature). PBMs exert enormous control over patients’ medications, from what
drugs are covered by their health plan, to how they access their prescriptions
and the amount they and their health plan sponsor (usually the patient’s
employer) will pay at the pharmacy counter. This is one of the
many areas where PBMs take advantage and drive-up out-of-pocket costs. PBMs
require drug manufacturers to pay them a rebate in order to get medications
covered by an insurance plan, but charge full price to the consumer and the
health plan payer, typically the patient’s employer, or taxpayers in the case of
Medicaid and Medicare. Instead of passing along the savings, PBMs collect what
amounts to millions of dollars in kickbacks and keep drug prices artificially
high for the rest of us.
The numbers are easy to find. In 2020, Quetipine, a drug used for depression and
schizophrenia, cost Arizona’s Medicaid program .75/tablet. Yet a search of
Medicaid.gov showed pharmacies that were not owned by/affiliated with PBMs were
reimbursed .26/tablet – a difference of .49/tablet, or $14.70 per 30-day
prescription. That’s $14.70 of taxpayer dollars per prescription that PBMs kept
for themselves. Worse still, later in 2020 PBMs charged Arizona Medicaid
$20.14/tablet for the same medication – an increase of 7,746% per tablet, with a
markup of $596.40 per 30-day prescription. If you are looking for why
prescription drugs are so expensive, PBMs are where the buck stops.
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One of the most egregious methods that PBMs use to
hurt consumers is patient steering; where patients are often moved
from their preferred pharmacy to a PBM-owned pharmacy without their
knowledge or consent – an issue that Arizona State Senate Bill 1161
is attempting to combat.
Patient steering can involve everything from
fraudulently contacting patients with “no-coverage” threats if the
patient does not change where they receive their medication, to mail
order schemes where a PBM uses loopholes to repackage the medication
in order to charge higher fees, to trolling patient data by sending
the patient’s medication to a PBM-owned or affiliated pharmacy for
refilling without the patient’s prior knowledge.
Moreover, the three largest PBMs own or are owned by the largest
health insurance companies which have in-house and/or mail-order
pharmacies that PBMs unethically steer prescriptions to. It’s a
practice so anticompetitive that many other states have passed
legislation banning it – and it’s easy to see why. Health insurers
are conspiring with the PBMs they own to inflate prices – leaving
consumers out in the cold.
It’s overwhelming to even scratch the surface of how PBMs manipulate
the U.S. drug market in order to put their own profit above patient
care and safety. Arizona may have its roots in the Wild West but our
citizens are smart enough to know when to pull the reins, which is
exactly what’s needed here: rein in the unchecked power of big
business PBM middlemen and bring their outdated business model into
the 21st century.
Teresa Dickinson is the owner of Melrose Pharmacy in Phoenix and
past president of Pharmacists United for Truth & Transparency
(PUTT). Monique M. Whitney is the current executive director of PUTT
and host of PUTTcast, a podcast exploring the pharmacy industry.
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