News Wire

The windfalls of secrecy

Express Scripts met with analysts at banking giant Barclays in March and mentioned how its “industry-leading EBITDA per claim” — a measure of profit they collect on each prescription — likely will be “sustainable over time,” according to Barclays’ note to Wall Street. Those comments come as each of the big three pharmacy benefit managers are being attached to health insurers.

The big picture: Some PBMs use a different “transparent” model to earn money, but they are in the minority. New documents obtained by Axios peel back the curtain on the traditional drug benefits business, though many details remain hidden from public view.

Show less

Some new documents shed light on how PBMs make money, and also reveal how difficult it is to get the full picture:

  • Nashville uses Express Scripts to provide drug benefits to city employees, and its publicly available 2017 contract lays out actual financial terms — including rebates. Many of the contract’s definitions are also identical to the template Axios previously published — including the brand/generic algorithm.
  • The state of Delaware amended its contract with Express Scripts a few years ago to ensure that Express Scripts guaranteed more rebates, according to a copy of the contract.
  • Axios obtained an OptumRx pharmacy benefits proposal through New Jersey’s open records law. New Jersey awarded its pharmacy benefits deal to OptumRx last year. However, several sections that outline financial terms for the taxpayer-funded prescription drug deal are “exempt from public disclosure.” OptumRx did not respond to questions.

What we’re hearing: Many people that work in the industry are voicing disdain for the business models and lack of transparency associated with the main players.

Read more here:

By Bob Herman

What CVS is doing to mom-and-pop pharmacies in the US will make your blood boil

The short version of what happened to CVS in 2018 is this: The company got too greedy, and then it got caught.

In its greed, the company squeezed independent mom-and-pop pharmacies. The squeezing wasn’t being done by the part of CVS you buy dental floss from or visit to pick up a prescription, though it’s not unrelated. It’s a behind-the-scenes business known as a pharmacy benefit manager, which manages payments between insurers and pharmacies and drug companies.

The mom-and-pop pharmacies say CVS’ in-house pharmacy benefit manager, CVS Caremark, slashed reimbursements for medications sold to their patients on Medicaid. At the same time, they say, it was reimbursing CVS pharmacies at much better rates. With some of them on the verge of going out of business, these pharmacies have rallied lawmakers — both Democrats and Republicans — to put an end to this.

Read more here

By Linette Lopez

Local pharmacy, lawmaker applaud passage of bill regulating pharmacy benefit managers

Gov. Asa Hutchinson signed a bill into law recently to have the state insurance commissioner license and regulate pharmacy benefit managers (PBMs), which small pharmacy owners have said are driving them out of business.

The Arkansas Pharmacy Benefits Manager Licensure Act, thought to be the first one of its kind in the country, had wide support in both parties in the House and Senate. PBMs have been criticized as “middlemen” between insurance companies and pharmacies, and handle pharmacy claims and reimbursements to pharmacies for medications distributed.

The legislature had attempted to regulate the industry in 2009 and 2015 will little effect, supporters of the new bill said.

“Hopefully this will protect the little pharmacists – the small business pharmacists out there – from the corporate PBMs that are questionable at best,” District 5 Sen. Bryan King said.

On Jan. 1, Arkansas Blue Cross and Blue Shield contracted with CVS Caremark as its PBM. Caremark already served as PBM for Ambetter in the state. Pharmacists around the state soon began getting smaller reimbursements for filling prescriptions, according to other media sources.

Read more here:

By Rod Harrington

Editorial: Stop soaking taxpayers for Medicaid drugs

Did you know that for every 60-mg caplet of duloxetine dispensed in Ohio through a Medicaid-contracted managed-care company, taxpayers pay a middleman $1.54, but the middleman passes only about 18 cents of that to the pharmacy that supplies the drug and pockets the $1.36 difference?

Sen. Bill Coley, R-West Chester, didn’t know, and he’s on the Senate Medicaid Oversight Committee. “We thought there was some nominal fee to PBMs but had no idea (the fees were so large),” Coley said. “It’s ridiculous.”

He’s talking about pharmacy benefit managers — private companies that contract with managed-care companies to handle prescriptions — deciding which drugs to cover and how much to reimburse pharmacies for them. Most of Ohio’s Medicaid members are served by one of five managed-care companies that contract with the state. For four of those companies, CVS is the subcontracted pharmacy benefit manager, or PBM.

What’s equally ridiculous is that state officials have tolerated contracts under which CVS and other PBMs get to decide how much they’ll charge taxpayers for a drug and how much they’ll pay the pharmacy for it without having to disclose any of that information.

Lawmakers say they’re taking steps to bring transparency to such contracts, and that’s important. But while they’re at it, they should set some reasonable guidelines for how much of a pharmacy transaction the PBMs are allowed to pocket.

Read more here:


American Antitrust Institute Argues Against CVS/Aetna and Cigna/Express Scripts Deals

The American Antitrust Institute (AAI), a 20-year-old nonprofit “devoted to promoting competition that protects consumers, businesses, and society,” came out sternly this week against pharmacy giant CVS’s proposed purchase of insurer Aetna.

“CVS-Aetna would trigger a fundamental restructuring of the US healthcare system,” the group writes in a letter addressed to Assistant Attorney General Makan Delrahim. They also express concerns about Cigna’s recent $52 billion offer to buy pharmacy benefits management (PBM) company Express Scripts. “Stronger incentives to exclude rival PBMs and health insurers and to engage in anticompetitive coordination would harm competition and consumers at all levels.”

There were only a handful of major PBMs in the country prior to CVS’s 2007 merger with Caremark. In 2012, Express Scripts and Medco also combined. Together, those 2 PBMs control more than 50% of the pharmacy benefits market. The third largest, Optum Rx, is integrated with Aetna rival UnitedHealthcare.

The letter says that CVS and Aetna should face a “high hurdle” in explaining how any efficiencies their combination would create could offset competitive concerns—and they believe that the pair would not be able to do that. A move by the Department of Justice (DOJ) to block the deal would be the “only effective remedy.”

Read more here:

By Ryan Black