Neustatter: Are pharmacy benefit managers operating a big shell game?

The Free Lance-Star

You’re probably sick of reading about COVID-19, and all the ways it can stress you out. So, instead, let me bring to your attention a different health care issue for you to fret about.

It’s an issue that epitomizes the way health care is being taken over by business entities whose priority is to make money more than to provide effective affordable health care to the people it is serving.

I’m talking about pharmacy benefit managers—PBMs.

Growing Awareness
I have been aware of these third-party administrators of prescription drug programs for awhile. I had heard rumors they were driving up drug prices. But my vague notions were solidified by reading “The Price We Pay: What Broke American Healthcare—and How We Fix it” by Dr. Marty Makary.

Makary is a surgeon at Johns Hopkins, and was the lead author of a report in JAMA in 2017 about hospitals suing patients for outstanding medical bills. You may have read about him when he came to Fredericksburg and advised patients being taken to court by Mary Washington Healthcare in 2019.

Pharmacy benefits managers started off innocently enough, administering the complex formularies of insurance companies and self-insured employers. They negotiate with drug companies, decide what tier a medicine should be in, and determine how much someone insured through that company would pay. They have great potential to keep drug prices down by negotiating bulk-buy discounts, or rebates from the drug manufacturers.

Medications are a large and profitable part of health care, and now PBMs seem to have taken on a life of their own—but by using devious practices to make massive profits.

Makary says, “It is now overwhelmingly apparent that PBMs are operating the biggest shell game in modern history, and we are all paying for it.”

How it Works
PBMs buy medicines at a discounted price, then “sell” them (actually they arrange the price at which they will be sold) at a markup, which they get paid by the insurance company or employer whose formulary they are managing—what is called “the spread” rather than profit, in this industry.
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