ErieNewsNow Special Report "The High Co$t of Prescriptions" Part 2
HARRISBURG, Pa. (ErieNewsNow) - Part 1 of The High Co$t of Prescriptions broke down the function of PBMs and how they were originally designed to be the middleman to negotiate better drug costs between drug manufacturers, pharmacies, and insurance companies. Over the years, that role changed.
“PBMs own their own pharmacies, PBMs get paid by drug manufacturers in exchange for covering medications. So, they're no longer purely working on our behalf and have become conflicted in such that they are pouring gasoline on the fire of high drug prices,” said Antonio Ciaccia, the President of 3 Axis Advisors and a drug pricing expert.
Ciaccia believes the country is at a tipping point when it comes to PBMs and high drug prices as more states begin to catch on.
“It was just four years ago in Ohio, where they discovered PBMs were taking $244 million out of the state Medicaid program. Since then, a number of states have taken action to audit their programs,” said Ciaccia.
“There needs to be significant reform in the system,” said Former Pennsylvania Auditor General Eugene DePasquale, who released a special report in 2018 detailing how PBMs could be responsible for higher prices. “And really got in the weeds and saw, to me, I won't say ripe with abuse, but I say ripe for reform,” DePasquale added.
The report detailed different ways PBMs could be making big profits from state programs like Medicaid. But exactly how much they profit is unknown because they're shielded from the public.
“When you're using public tax dollars to make hundreds of millions of dollars, I believe the public has a right to look at how you're making those dollars,” said DePasquale.
Some state lawmakers agree with the former Auditor General.
“We're looking for transparency and accountability,” said Representative Jonathan Fritz (R-Wayne/Susquehanna). “They have control over distribution and pricing and reimbursement and formulary data that gives them an inordinate amount of control over pricing,” said Rep. Fritz who is the sponsor of House Bill 1630. His bill would give the Auditor General the ability to audit PBMs, who are currently protected as subcontractors with the Commonwealth. HB 1630 recently passed the House unanimously.
“Again, it's good government, it’s transparency, it's efficiency,” said Fritz.
While there are efforts to increase transparency in Harrisburg, the question of whether PBMs are still necessary remains. That question took us from Harrisburg just a few hours west to Pittsburgh, to see if pharmaceuticals can, in fact, be done differently.
“We don't deal with PBMs at all, and almost everybody gets lower prices here than they would through their insurance,” said Dr. Kyle McCormick, the founder of Blueberry Pharmacy, a pharmacy that is doing things a bit differently.
"Instead of making up prices that aren't tied to any real price, we take our costs, so say something costs us $1 to buy, we add on a $10 dispensing fee and charge $11,” said McCormick, who pursued the cost-plus model after seeing the effects declining PBM reimbursement rates had on pharmacies. “Patients expenses have gone up, but also drug costs have gone down. So, it didn't make sense to me that if drug costs were going down, patients' prices were going up, and pharmacies weren't making any money. Why not just cut out the problem, the PBM,” he added.
McCormick says insurance is for high-cost unknown events, not for inexpensive generic medication, which make up roughly 90 percent of prescriptions filled annually.
“If insurance is for high-cost unknown, a generic blood pressure medication that costs pennies is low-cost, predictable, you have to take it for the rest of your life,” said McCormick.
For McCormick, Blueberry Pharmacy's model is simply a return to the basics.
“But a lot of what we're doing is just going back to the traditional days of pharmacy, where you shop around and you find the best price and the best service, that's where you get your drugs from,” said McCormick.
It’s a return to tradition that can have a profound impact on the future of care.
"A lot of patients may not be on the best therapies because it's assumed that they're just too expensive and so we could actually be treating a lot of disease states probably a little bit more effectively if prices were actually real,” said McCormick.
In recent years the PBM industry has responded to increased scrutiny by saying that only drug manufacturers have the power to set the list prices for their products. But as different sectors point the finger at one-another, the pharmaceutical industry grows larger and larger, leaving everyday Americans searching for answers, and potentially even settling for a lower quality of care.