CMS Head and PBMs – leaving off the hook and drinking their koolaid

Andy Slavitt is currently head of CMS, a position he will vacate with the new Trump Administration when Seema Verma takes over under leadership of HHS Chief – Dr. Tom Price.   Andy’s industry experience is quite interesting as he started a “discount” plan (that included medications) that he eventually sold to UnitedHealthcare (Optum) and worked his way up the corporate ladder from there.

Interesting to note – why need a “discount” card at all?  Answer:  because PBMs have artificially increased prices in the marketplace to show their (perceived) value to their end clients.  How is this done?  For expensive Brand name medications 50% more or less gives the PBM play money to manipulate with these rebates supposedly going back to plan sponsors (clients), but in reality the amounts are almost impossible to audit and no one knows for sure.  There’s a rather high portion of commercial clients that receive NO rebates at all – yet those rebates go to the PBM.

For Generics, pharmacies have U&C pricing, which at this point with reimbursement models (of MAC pricing, etc) makes calculating “discounts” off of U&C is really all funny money and made up.  With higher copays, patients are finding that their copays are HIGHER than what the pharmacy would have charged them without insurance.  Its a billing “game” with rules set by PBMs and pharmacies having absolutely NO say and the patients and payers are caught in the middle.

So where do the RxDiscount cards come into play?  Companies work (somehow) with PBMs and access their commercial contracts so people pay a lower amount (off of U&C) than supposedly they would pay without any card/discount at all.  While these cards may help patients at large chains who have unattractive cash pricing, they are unneeded at most independent pharmacies and places like Costco where Rx pricing is done on a “cost plus” basis for the consumer.  There is another not very well publicized, but hard truth about these cards in that the “data” of patient, doctor, medication, etc is gathered and sold to companies for whatever reason they want to use the data for – good or bad.  In the latest case of BlinkHealth, we’ve learned a disturbing fact that this data is most certainly used for nefarious purposes that have nothing to do with healthcare – but health data is used against patients for the purpose of those who have access or control of the data.

So, why do the discount cards exist?  To make the discount card companies $$ – including Andy Slavitt.  There is “spread” in the contract pricing to the pharmacy AND the price to the patient.  And its even more “profit” than the pharmacy who dispenses the Rx to the patient receives.  The discount companies – BlinkHealth, GoodRx, and Andy Slavitt’s HealthAllies (now owned by OptumRx but still functioning) KEEP the spread.  What a racket right?  A cost plus pricing model takes out the spread, gives the patient a good price, the pharmacy a fair margin and the even better benefit for the patient NO data is sold for that transaction.

Since Andy Slavitt’s income and then subsequent sale and then paychecks came from OptumRx and this “spread” model pricing – it is NOT a surprise that conveniently he left out these middlemen (of which he was one and who knows may be one again in January) and their opaque pricing models set up under the guise of helping patients, but in reality give money to the middlemen for their bottom line and to add value to shareholders.

Wouldn’t this be called the epitome of being biased?  If it weren’t for the #epigate scandal we’d (the American public, policy makers, healthcare providers, legislators, etc) wouldn’t have any idea that the middlemen added such (unneccessary) and self serving cost to these expensive drugs.  There’s no way that CMS head Andy Slavitt and every other person at CMS isn’t aware of the Epipen issue and now knows (if they didn’t before) how much $$ the PBMs are taking for themselves.

So, strangely quiet about the $$ in the middle by PBM middlemen was Andy Slavitt in a blog post in November, but retweeted this week.

Its no wonder that pharmacies are getting whacked with #Dirfees and PBMs continue to solidify their oligopoly with self dealing of forcing patients to their own mail order, specialty and even retail stores.  EVEN in the case of state Medicaid programs – who have to abide by CMS/HHS policies/rules.  The greed of PBMs have run out of control encouraged or ignored by our government led by the likes of PBMphile Andy Slavitt.  Glad their reign is over.