Bloomberg Law Review
The U.S. Supreme Court will hear a case that could decide the validity of at least 38 states’ laws regulating how companies like Express Scripts and CVS Health make money off prescription drugs.
The justices agreed Jan. 10 to take a case asking whether an Arkansas law regulating pharmacy benefit managers is preempted by the federal Employee Retirement Income Security Act. The Pharmaceutical Care Management Association, a trade group representing PBMs, successfully challenged the law on ERISA preemption grounds in the Eighth Circuit.
The court’s decision to hear the case came at the urging of U.S. Solicitor General Noel J. Francisco, who argued that the Arkansas law doesn’t reference ERISA plans or have an impermissible connection with them.
At least 38 states have passed laws regulating how pharmacy benefit managers make money off prescription drugs. The states say the laws in question seek to tamp down on ever-increasing prescription drug costs by making the relationships between pharmacies, pharmacy benefit managers, and consumers more transparent.
The PCMA has challenged several of these laws by arguing that they interfere with ERISA or Medicare statutes. The Eighth Circuit has twice agreed with the PCMA, striking down state laws in both Arkansas and Iowa, with a challenge to North Dakota‘s law pending. Outside the Eighth Circuit, the PCMA is challenging an Oklahoma regulation in federal district court.
California, New York, and 30 other states also urged the Supreme Court to take this case.
McDermott Will & Emery LLP represents the PCMA.
The case is Rutledge v. Pharm. Care Mgmt. Assoc., U.S., No. 18-540, certiorari granted 1/10/20.
The federal government accused pharmacy giant CVS Health and its Omnicare business of fraudulently billing federal health programs for hundreds of thousands of drugs dispensed without prescriptions.
In a civil healthcare fraud lawsuit filed Tuesday, the Manhattan U.S. attorney claimed that Omnicare, a provider of pharmacy services to long-term care facilities, violated the False Claims Act by allowing its pharmacies to dispense prescription drugs to elderly and disabled residents even though prescriptions had expired or were out of refills.
Omnicare then billed Medicare, Medicaid and Tricare for the illegally dispensed drugs, which included antipsychotics, anticonvulsants and cardiovascular drugs and other medications, the complaint alleged. The U.S. intervened in two whistleblower lawsuits against Omnicare. It is seeking treble damages and civil penalties.
"A pharmacy's fundamental obligation is to ensure that drugs are dispensed only under the supervision of treating doctors who monitor patients' drug therapies. Omnicare blatantly ignored this obligation in favor of pushing drugs out the door as quickly as possible to make more money," Manhattan U.S. Attorney Geoffrey Berman said in a statement.
From 2010 to 2018, instead of obtaining new prescriptions from patients' doctors, Omnicare pharmacies simply "rolled over" the prescriptions by automatically assigning a new prescription number, refills and prescription date, according to the complaint.
Continuing to dispense invalid prescriptions allowed Omnicare to fill more prescriptions and collect more revenue, while putting individuals living in residential facilities at risk by dispensing medications with dangerous side effects and that must be monitored by a doctor, according to the lawsuit. Omnicare allegedly allowed prescriptions to roll over in at least 1,766 residential living facilities.
A CVS Health spokesman said the claims had no merit. "We are confident that Omnicare's dispensing practices will be found to be consistent with state requirements and industry-accepted practices," he said in an emailed statement.
Omnicare, which was acquired by CVS in 2015 for $12.7 billion, has come under fire for its pharmacy practices before. In 2012, the company paid $50 million to settle U.S. Justice Department claims that its pharmacies had dispensed controlled substances to long-term care facility residents without valid prescriptions.
In 2016, Omnicare paid $28.1 million to settle allegations it requested and accepted kickbacks from Abbott Laboratories to promote the drugmaker's epilepsy drug to nursing home residents.
WSHU Public Radio
Independent pharmacies say they’re being squeezed to the brink of closing by the sharp rise in prescription drug prices. We’ll discuss how pharmacy benefit managers affect the flow of customers to big and small drugstores, with guests:
The Indiana Gazette
Pharmacy benefit managers were created to control prescription drug prices. Since they arrived on the scene in 1987, however, prescription drug benefit costs have risen by 1,129 percent and patients’ actual out-of-pocket costs have increased by almost 200 percent.
Here in Pennsylvania, a 2018 report from Auditor General Eugene DePasquale found that as prescription drug costs in the commonwealth went from $1.41 billion in 2013 to $2.86 billion in 2017 (an increase of more than 100 percent!), the average price of a prescription at a community pharmacy actually went down slightly and prescription volume was flat.
Where did all that money go? To pharmacy benefit managers; the multibillion-dollar quasi-monopolies that set the prices patients pay for prescription drugs and create pharmacy networks, often pushing people to pharmacies that they own.
In fact, the top three PBMs control as much as 89 percent of the U.S. marketplace.
Despite their claims to the contrary, PBMs actually benefit from higher prices due to perverse incentives. Drug manufacturers offer discounts in the form of rebates, which are meant to be savings to be passed along to patients.
Importantly, rebates are usually provided for the most expensive drugs; so, the higher the price of the drug, the higher the rebate.
The rebate process lacks transparency, so there is no way to determine how much PBMs increase their profits by pocketing some if not all of these rebates, which should be intended for patients. As Auditor General DePasquale found, “the rebate process is not working to lower costs for patients,” leaving the sickest people, who rely most on drugs, paying more than ever to keep premiums level.
In other words, elderly patients are subsidizing everybody else.
PBMs leverage the power of their formularies to bully not only patients but all players in the health care space.
They can essentially choose winners and losers, giving them enormous leverage over each party and leaving little room for small-business pharmacies to operate and serve their local communities.
A recent National Community Pharmacists Association survey of independent community pharmacists revealed that almost 60 percent may close their doors in the next two years, with nearly two-thirds saying that the biggest problem are the back-door fees the PBMs claw back from pharmacies weeks or months after transactions.
PBM abuses hurt more than just patients and small-business pharmacies; they cost taxpayers enormous sums of money.
Fortunately, there is a way for Pennsylvania to ensure their PBMs are controlling drug costs: increasing PBM transparency. Increased transparency has worked in other states.
For example, West Virginia has saved $54 million a year by removing opaque PBM practices from its Medicaid program. Ohio moved to more transparency PBM contracts after determining the move would save $16 million a year.
There’s plenty wrong with our health care system. We’re not blaming PBMs for all of the problems, but their fingerprints are all over one of the biggest issues, which is runaway prescription drug prices.
We applaud the local and federal policymakers who are focusing on lowering drug prices, reining in PBMs, and enacting real solutions for independent pharmacies, their patients and taxpayers.
Stephanie Smith Cooney, Pharm.D., is president of Gatti Pharmacy in downtown Indiana.
The Columbus Dispatch
A national drug-pricing consultant says despite implementing a new pricing system and other efforts to rein in pharmacy middlemen, Ohio’s Medicaid program continues “hemorrhaging” tax dollars.
“You are hemorrhaging money right now,” Linda Cahn, a critic of pharmacy benefit managers, told the Joint Medicaid Oversight Commission on Thursday.
Pharmacy benefit managers hired to oversee the $3 billion a year drug program have contracts that allow them to increase profits rather than keeping costs down, she said. The profits are largely hidden and come from rebates from drug manufacturers, manipulating drug costs, self-dealing with affiliated pharmacies and other loopholes, she said.
“There are so many problems here, you have to write a contract that addresses all of them, and you have to bring in people who know enough about this to help the Medicaid division do that ...it’s a very complex industry,” Cahn said.
“If you address all of the problems, you will dramatically, dramatically reduce your cost and end up with far better coverage.”
Cahn said to solve the problem, the state needs to negotiate an “air-tight contract” or handle pharmacy benefits in house. “All you can do is put controls on every one of these loopholes.”
She said Medicaid officials are not to blame.
“There is not a state in the country that has a good contract. I’ve never seen a good contract with an insurance company.”
Committee chairman Rep. Mark Romanchuk, R-Mansfield, said he asked Cahn to help lay out a road map for much-needed reforms, starting with improved contracts.
“Everybody knows what needs to be done. The question now is will that policy be executed properly,” he said.
At the legislature’s urging, Medicaid officials are in the process of contracting directly with a single pharmacy benefit manager to administer drug benefits.
The $28 billion Medicaid program provides health insurance to nearly 3 million poor and disabled Ohioans. Currently, the state contracts with five private managed care plans to oversee the program and they employ three PBMs — CVS Caremark, RxAdvance and OptumRx — to manage pharmacy benefits.
A recent study found that CVS Caremark and OptumRx billed the state $244 million more than they paid pharmacists in a single year, allowing them to profit three to six times the industry standard. Using a spread-pricing model, the PBMs billed the state far more than they paid pharmacists to fill prescriptions and kept the difference.
Ohio this year switched to a pass-through pricing model, which requires PBMs to pay pharmacists the exact amount they bill the state and pays them a fee for their services. But Cahn said even with the new system there are still hidden loopholes allowing PBMs to profit. For instance, PBMs can set artificially high drug prices and profit through an affiliated pharmacy.
The national trade association representing PBMs criticized Cahn’s credibility before she testified.
“Ms. Cahn is widely known as a vocal PBM critic, who initially gained prominence from a series of lawsuits she led against PBMs beginning in 1997. Based on any cursory review of Ms. Cahn’s past public comments, it is not possible to believe her testimony can reflect an impartial, objective perspective of PBMs’ role in Ohio’s Medicaid program,” Matt Borges, a Columbus lobbyist and former state GOP chairman representing the Pharmaceutical Care Management Association, wrote in a letter Tuesday to committee members.
To “gain a more complete picture,” Borges suggested the panel hear from others, including the association. “PBMs are the only entities in the drug supply chain focused on reducing cost,” he said.
Medicaid officials did not immediately respond to a request for comment. It was not immediately apparent whether any were at the meeting of the legislative panel established to oversee Medicaid.
WAND NBC17 November 13, 2019
NOKOMIS, Ill. (WAND) – Independent pharmacists tell WAND News they are seeing patients request prescription drug refills only to find the prescription has been transferred to a mail order facility without their knowledge.
David Falk of the Sav-Mor pharmacy in Nokomis and Lauren Young of Dale’s Southlake Pharmacy in Decatur tell similar stories: customers requesting a prescription drug refill and then the pharmacist having the refill rejected. It’s then determined the request is being filled through mail order. When the customer is contacted, the customer says they did not request the prescription be transferred from their local pharmacy.
Falk cites a case over the summer where a customer wanted her prescription refilled at his pharmacy. She is signed up to a plan through Medicare Part-D. She received a letter from a Pharmacy Benefit Manager, PBM, and was told her the order was on hold and she needed to call the PBM to confirm the order. PBMs are the middleman between the pharmacist and insurance companies.
Falk tells WAND News the patient did not ask her doctor to transfer the prescription to the PBM. Her order was eventually cancelled and the prescription has been reestablished with Sav-Mor.
The PBM, CVS/Caremark, tells WAND it received the prescription from the healthcare provider and attempted to contact the customer by phone. When Caremark could not reach the customer it sent out a letter requesting verification. The order, according to Caremark, was cancelled at her request.
To watch the broadcast of this investigative story, click HERE
Pharmacy benefit managers vs. firefighters: Crack down on middlemen who drive up the cost of prescription drugs
New York Daily News
Firefighters put their lives on the line daily to run into burning buildings and limit property damage.
The 18,000 hardworking men and women represented by the New York Professional Fire Fighters Association work in departments across New York State and respond to more than a million calls each year, ranging from structure fires to multi-vehicle accidents and medical emergencies.
Like all workers, these brave men and women feel the squeeze of rising health-care costs and the dangerous spike in prescription drugs. Every day, news reports reveal new horror stories of people struggling to stay alive because they cannot afford their desperately needed medication.
That’s why we urge Gov. Cuomo to immediately sign a bill that has passed both houses of the state Legislature that would prevent pharmacy benefit managers (PBMs) from using “utilization management” tools, such as step therapy (often called “fail first”) and non-medical switching, to deny or delay access to prescription drugs for things like pain management and cancer treatment.
In some cases, these bad practices on the part of PBMs can even be fatal. These life-and-death decisions should be left to doctors — not profit-oriented corporations.
Pharmacy benefit managers are middlemen who make money by pushing certain drugs and treatments — often favoring policies that delay access to necessary and prescribed drugs in order to favor experimental options that cost the PBMs less.
The protections in the just-passed legislation would ensure that hard-earned health benefits are preserved for all workers, empowering doctors, not profit-motivated middlemen, to make medication decisions. A recent state Senate committee investigation found that a “lack of transparency” and weak oversight allowed PBMs to “engage in self-dealing to the detriment of consumers across New York State” without transparency or proper oversight.
This bill would ban PBM policies that restrict patient choice and devalue New Yorkers’ health plans. The problems are most acutely felt by the working men and women who support families on good union wages and benefits. All too often, they encounter roadblocks to getting the drugs they need despite having good health plans through years of collective bargaining.
The legislation requires PBMs to register with the Department of Financial Services by April 1, 2020 and be licensed by Jan. 1, 2021. DFS would regulate PBMs and monitor them for conflicts of interest and deceptive practices and anti-competitive practices.
PBMs’ most insidious “utilization tools” are step therapy — also known as “fail first” — and non-medical switching. These policies ignore the advice of doctors and put medical decisions in the hands of bureaucrats whose major aim is to make money.
The Community Oncology Alliance, a non-profit that advocates for affordable care for cancer patients and want to get PBMs “out of the loop,” cites countless “horror” stories of patient interactions with PBMs that are needlessly dragged out and occasional lead to more serious illness or even death.
We have all have endured years of attacks on organized labor. Workers must not be forced to suffer further reductions in quality and affordable care foisted upon them by corporations who put profits before protection.
Fresina is president of the New York State Professional Firefighters Association.
The Washington Examiner
Washington is consumed with wall-to-wall coverage of impeachment, Ukraine, and transcripts. Every question we receive from the D.C. press corps is about that. But do you know who isn’t obsessed with this? Our constituents.
Every day, we hear from people across North Dakota and Iowa. Most of them are not talking to us about impeachment. They are coming to us because they worry about being able to afford the medications they need to live. They face heartbreaking calculations, trying to figure out if they can pick up their prescriptions and still afford to put food on the table or pay for their housing.
This is reality for people living outside the Washington bubble. It’s the reality for many of our constituents and people all across the country. It’s the reality we’re determined to fix through bipartisan and thoughtful legislation.
There are a lot of factors that keep the cost of prescription drugs high. One of them is pharmacy benefit managers or PBMs. These middlemen in the drug supply chain act as a go-between for pharmacies and insurers. Under Medicare Part D, PBMs negotiate the price of prescription drugs. In a perfect world, they would use the savings to lower the amount the patient pays at the pharmacy counter; unfortunately, that rarely happens.
Prescription drug middlemen, as well as drug manufacturers, too often respond to the current incentives in the system by putting their financial gain ahead of patients. A pointed example is the egregious increase in the cost of insulin. Though this drug has been available for nearly a century, its list price has recently skyrocketed. In Medicare alone, out-of-pocket costs for insulin have more than quadrupled since 2007. It’s been estimated that the price of a 40-day supply of this diabetes treatment rose from $344 in 2012 to more than $660 just four years later.
Though manufacturers set the list price for insulin, PBMs play a critical role in pricing as the primary negotiators. The American Diabetes Association found that as PBMs have secured increased rebates as a percentage of the list price, the heightened rebates have contributed to the higher cost of insulin for too many patients. Patients who have to pay out-of-pocket or pay a percentage of the list price instead of a lower flat co-payment can face financial challenges that can have devastating consequences. Earlier this year, the Senate Finance Committee held a hearing on drug pricing. At that hearing, one witness testified that her son, worried about the financial burden his monthly $1,700 insulin prescription was putting on his parents, began rationing his treatments. Tragically, that can have life-threatening consequences.
Bipartisan legislation, on top of aggressive oversight of insulin manufacturers and PBMs, are the steps we’ve already taken to help bring down costs of insulin and other prescription drugs. But other factors contribute to high prices at the pharmacy counter.
Other PBM practices also keep drug prices high so that patients pay more at the pharmacy counter. PBMs use direct and indirect remuneration fees, also called “clawback” fees, that pharmacies must pay back months after a prescription is filled. This practice not only puts a strain on pharmacies’ ability to serve their communities, it requires patients to pay based on an amount that is higher than the true cost of the drug. Another way is through spread-pricing. PBMs buy drugs from wholesalers at one price and sell them to pharmacies at a much higher price. The discrepancy between prices is often significant, particularly for generics. The inflated prices are good for PBMs, but bad for patients and taxpayers.
Increased transparency in the drug pricing system is critical to lowering costs for patients and taxpayers. That’s why we’ve been working on legislation that shines a light on manipulative practices by drug makers and PBMs, including the Prescription Drug Pricing Reduction Act.
This legislation not only increases transparency into the opaque practices of PBMs but also addresses the lack of transparency in manufacturer drug pricing decisions. Further, it improves incentives to increase negotiation between prescription drug plans and manufacturers in order to help reduce costs at the front end of the process and provide true savings to patients at the pharmacy counter.
The Congressional Budget Office estimates that our bill would save taxpayers more than $100 billion — including $90 billion in Medicare and more than $15 billion in Medicaid. Medicare beneficiaries would also save $25 billion in out-of-pocket costs and $6 billion in premiums. Americans in the commercial market would also see savings due to a provision in the bill that would reduce Medicare costs for prescription drug benefits also offered by commercial insurance plans.
The day-to-day political dramas that shroud “Beltway Insiders” don’t represent the wants and needs of most Americans. It’s the kitchen table issues, such as the high cost of prescription drugs, that folks in North Dakota, Iowa, and other states want and need solutions for. With leaders on both sides of the aisle recognizing this problem, we have an opportunity to pass meaningful, bipartisan legislation to help those we serve. While no legislation is ever perfect, we urge our colleagues to join our efforts and work with us to pass real reforms.
Chuck Grassley, Iowa's senior U.S. senator, is chairman of the Senate Finance Committee. Kevin Cramer is North Dakota's junior U.S. senator. Both are Republicans.
Healthpayer Intelligence, Xtelligent Healthcare Media
Employers Rx Will Lobby Against PBMs and Drug Manufacturers Over Price Transparency, Fair Business Practices, Rebates, and a Drug Price Increase Cap
When it comes to lowering skyrocketing drug prices, employers are making their voices heard on drug price transparency, drug price increase caps, and other price reducing strategies through the new coalition Employers' Prescription for Affordable Drugs(EmployersRx).
The coalition comprises health advocate groups including the Pacific Business Group on Health (PBGH), the ERISA Industry Committee (ERIC), and the National Alliance of Healthcare Purchaser Coalitions (National Alliance). Together, the organizations plan to advocate for lowering drug prices and promoting price transparency.
“As the largest collective purchaser of health care, businesses have a responsibility to employees and their families to tackle this important issue,” said Elizabeth Mitchell, president and chief executive officer of PBGH. “Employers and patients are tired of bearing the brunt of high costs caused by a gamed system set up by drug manufacturers and pharmacy benefit managers. Employers are doing everything they can to contain costs, but this problem is too big to fix without action from the government.”
To the coalition, drug manufacturers and middlemen like pharmacy benefit managers are the source of high drug costs. Thus, their four-pronged legislative approach to de-escalating drug prices focuses exclusively on those stakeholders.
courtesy of Axios
Michigan's Medicaid program is proposing to fire the pharmacy benefit managers that handle its prescription drug claims and negotiate prices. The state would manage drug coverage itself, starting Dec. 1.
The big picture: More state Medicaid agencies have determined that outsourcing all negotiations and operations of prescription drugs to PBMs has not produced the dramatic savings they were promised.
Details: Michigan officials said in a bulletin the state could extract bigger rebates from pharmaceutical companies and cut administrative costs if the state handled all Medicaid medication benefits, instead of the current private contractors.
Between the lines: State governments, along with pharmacists, continue to lead the crusadesagainst PBMs.