PUTT Sign-On Letter to the FTC Regarding PBM Practices and Their Harm to the Healthcare System

Apr 20, 2022

How Pharmacy Benefit Managers are Gaming the System to Their Advantage, Creating Obstacles for Patients and Creating a Real and Present Danger to non-PBM owned Pharmacies

Dear Chair Khan:

Thank you for the work the FTC is undertaking to study the impact that Pharmacy Benefit Managers (PBMs) have on the entire healthcare system, independent pharmacies, and most importantly, American patients and taxpayers. This is an incredibly critical undertaking and one that we hope you will continue to pursue.

Pharmacists United for Truth and Transparency (PUTT) is a non-profit advocacy organization founded by independent pharmacists and pharmacy owners. Ours is a grassroots effort that includes doctors and patient advocates in addition to pharmacists. Our mission is to fight the egregious practices constantly and regularly employed by PBMs that harm local businesses, employers, and American consumers.

As described in more detail below, PBMs employ these tactics through a number of draconian policies that adversely affect not only patients, but also the ability of local healthcare providers to act in the best interests of their patients. We expect that further study by the Federal Trade Commission will assist in shining a bright light on these problems and demonstrate the dire need for transparency and regulatory action within the industry.

Within the current market there are multiple inequities and roadblocks to patient access and care. The largest PBMs either own or are owned by giant, vertically integrated insurance conglomerates, putting them in the questionable position of controlling not only prescription drug rebates and pricing, but also patient care protocols and the reimbursements of their competitors, not to mention the vast majority of patient data which they use to their profit advantage through practices like patient steering.

Pharmacies are regularly forced to enter into non-negotiable, one-sided contracts with the largest PBMs in order to keep serving their patients. Many of these contracts, which PBMs often adjust or change without notice, are not only skewed in favor of corporate profits, they additionally disallow price concessions or local services by the pharmacy that would be in the best interests of the patient – often including threats of fines, clawbacks, or removal from the PBM’s “preferred network” if the pharmacy engages in the simple act of counseling a patient on lower cost options or providing delivery for a local patient in need.

Some PBM policies that continually cause pharmacies, providers, and their patients harm are:

Gag Clauses:

While outlawed at the federal level in 2018, some PBM contracts still contain language that prohibits pharmacists from telling a patient that they could pay less for specific medications if they pay directly out of pocket, instead of filing the prescription through their insurance. It may sound counterintuitive, but it unfortunately happens more than anyone would expect.

Here’s how it works: A customer goes to the pharmacy and is charged a $20 copay for their medication. But the actual cost to the pharmacy is only $5 - the extra $15 goes to the Pharmacy Benefit Manager. Many local pharmacists risk retaliation to save their patients money, but contractually, the PBM’s gag clause puts them in a precarious situation for retribution – including the possibility of being removed from that PBM’s pharmacy network.

Spread Pricing:

As contracted entities, PBMs charge states and employers for the cost of dispensing a medication to a patient. Unfortunately, the costs that PBMs charge are often much higher than what pharmacies are paid for a prescription, or even the actual cost of a medication. That extra money, or “spread”, is charged to the plan payer and structured as a revenue source for the PBM. These spread tactics can translate into billions of dollars per year, and in the case of state Medicaid programs studies have shown billions of taxpayer dollars going directly to PBM profits, not to offset premiums nor to lower patients’ out of pocket costs at the pharmacy counter.

Co-Pay Accumulators

Many patients living with chronic illnesses utilize pharmaceutical manufacturer copay assistance programs to be able to afford their life-saving medications. Until recently, the total cost of those medications including the copay assistance dollars was applied to a patient’s prescription drug deductible. As certain plans require the patient to meet high medication deductibles before insurance kicks in, these programs have ensured that lower and fixed income patients are able to afford the medication they need on a monthly basis.

The inclusion of copay accumulators in many patient’s prescription drug plans means that only the amount a patient pays out of pocket now applies to their deductible. Once copay assistance runs out, a patient may not be able to afford the cost of their medication at all, in addition to still not receiving insurance benefits from the inability to reach their deductible threshold. Furthermore, the PBM continues to retain the dollar amount contributed by the manufacturer. It’s a double-dipping move by the PBM/insurance company to receive payment twice for the same prescription medication while ensuring they will never have to pay on the patient’s behalf at the pharmacy counter.

Exclusionary Formularies

PBMs purport that their creation of plan formularies is an effort to lower prescription drug costs for both patients and plan payers.

Unfortunately, formulary choices are not driven by science or patient outcomes. PBMs routinely exclude lifesaving medications from their formularies based on the failure of drug manufacturers to pay sufficiently high rebates. Manufacturers have little choice but to “pay to play” in an effort to get their medications to the patients that need them most.

Patients can be forced to wait extended periods of time while they and their doctors appeal for coverage of a medication, or are forced to endure multiple rounds of fail first therapies that are in direct conflict with their physician's orders before an appeal for coverage will even be considered. The recent case of the removal of Eliquis from CVS Caremark formularies despite pleading from multiple medical organizations resulted in millions of patients experiencing adverse effects from non-medical switching requirements. In these cases, effective medications that a PBM keeps out of reach could prevent further physical damage or worsening of a patient’s condition - so as coverage continues to be denied, the patient’s health continues to decline.

Rebates as Revenue Sources, Not Drug Cost Diminishers:

As previously stated, PBMs demand that manufacturers offer discounted pricing on the medications they produce in order to have placement on an insurer's drug formulary. These rebates, initially intended to lower costs for patients, instead have been proven to drive costs up. Studies show that commercially insured patients are often and unknowingly paying significantly more for medication than their insurance company. Estimates show that 1 in 5 brand name prescription cost sharing is based on the original list price, not the rebated price.

Patient Steering:

PBMs regularly attempt to steer patients away from in-network independently owned pharmacies to PBM-owned or affiliated corporate chain pharmacies. Our members have sent proof of letters, and collected stories of phone calls using misinformation, trickery, and threats to drive patients away from their preferred local pharmacy to PBM owned or affiliated chains and mail-order.

Patient steering is an unconscionable and anti-competitive practice that is not only unethical, but additionally results in the spread of pharmacy deserts and reduced access to care - especially in our nation’s rural and lower income areas where chains don't exist and internet access can be hard to come by.

PBM abuse of the system must be brought to light and stopped. We encourage the FTC to engage in a full study review of this industry, which has been allowed to operate with little oversight and no regulation for far too long. American patients deserve health care, not a broken system controlled by corporate illicit practices that benefit shareholders instead of patients.

Thank you for your consideration.


Sincerely,

Monique M. Whitney, MBA
Executive Director