Today our correspondent Dan Fleshler, a longtime T1D writer and media strategist, continues our series of articles on Pharmacy Benefit Managers (PBMs).
Under hashtag #PBMsExposed, we're calling these healthcare power brokers to the carpet on their role in this country's escalating drug pricing crisis.
On Advocating for PBM Changes, by Dan Fleshler
At best, Pharmacy Benefit Managers (PBMs) — key middlemen in the drug pricing system — are simply enablers of the nutty, inefficient process that ratchets up the price of insulin and other life-saving drugs in the U.S.
At worst, the PBMs are major culprits in drug price inflation, and their profits come at the expense of people like Gabriella Corley, a fourth-grader whose parents, NBC reported, can’t afford the insulin she needs to survive.
Either way, the good news is that PBMs’ contributions to the unconscionably high cost of insulin and other prescription drugs are finally getting attention from both fired-up patient advocates and the mainstream media.
So are there any concrete, do-able reforms that would ensure PBMs are not making undue profits off the backs of people with chronic diseases?
Is that even a reasonable question at a time when, given our current President and Congress, the odds of developing a sane, fair healthcare system seem equivalent to the odds of my New York Knicks winning this year’s NBA playoffs (spoiler alert: they’re not in the playoffs)?
Yes to both, but first let’s pause to examine the problem.
Do PBMs “Artificially Inflate” Prices?
For a searing, disturbing indictment of the complicity of both PBMs and Big Pharma in this escalating crisis, check out a recent lawsuit initiated by the Type 1 Diabetes Defense Foundation. It was filed against insulin makers and the biggest PBMs -- CVS, ExpressScripts and OptumRx.
The lawsuit alleges that PBMs “conspired with the insulin manufacturers to artificially inflate the price of insulin for their own collective benefit.” A press release from the plaintiff’s attorneys described how both industries “game the system” of drug pricing:
PBMs sell exclusionary or preferential access to their formularies in exchange for a cut of rebates and other fees paid by the drug manufacturers to the PBMs…. Although the PBMs claim the rebates and other payments lower the cost of insulin, in fact, this is misleading. The rebates and other payments decrease the cost of insulin for the PBMs and the insurers with whom the rebates are shared, but drive up the cost for consumers.
That’s a plausible, albeit worst-case, interpretation. To be fair, PBMs, like pharma companies, also do a lot of good. And it’s hard to calculate precisely how much blame PBMs deserve for insulin price inflation.
But it’s clear that middlemen in the U.S. are taking a much bigger slice of revenues from prescription drugs than they take in countries where drug prices are low.
“In the U.S., $15 of every $100 spent on brand-name drugs goes to middlemen, estimates Ravi Mehrotra, a partner at MTS Health Partners,” Bloomberg reports. “The largest share, about $8, goes to benefit managers. In other developed countries, only $4 out of every $100 goes to middlemen.”
So what can be done about this?
Obviously, more transparency would be a good start. Anyone following this issue knows that currently, the pricing process is veiled by confidential contracts between PBMs and drug makers, retail pharmacies and others in the supply chain. Without bringing sunlight to that dark, murky world of backroom deals, it’s impossible to assess the PBMs’ precise responsibility for high drug costs and difficult to figure out how to reform the system.
Neither the drug makers nor PBMs want transparent pricing. Funny, they are pointing fingers and blaming each other for high prescription drug prices lately, yet they are united against full transparency.
That means sunlight is a great idea.
Openness, via Litigation
Transparency is one goal of the Type 1 Diabetes Defense Foundation’s lawsuit, the first legal action to call for “injunctive relief” that would include “disclosure requirements going forward that will increase transparency in a market where a hidden dual pricing system has driven insulin prices through the roof.”
Let’s hope they get somewhere. This and other class action litigation against insulin makers might not succeed in the courts, but it will certainly increase pressure on PBMs and drug makers to stop doing business-as-usual.
One way you can help is by going to this "Insulin Overpricing" case link and getting involved as a plaintiff.
Push for State and Congressional Legislation
Some state legislatures have passed bills calling for transparency in drug pricing. But, not surprisingly, the bills have been fought in court by trade associations for both Big Pharma and the PBMs, and have had limited impact.
Still, if diabetes advocates want sunlight and other changes, local activism in state capitols is worth orchestrating. A sensible bill just introduced in Nevada that is focused on containing insulin costs includes a transparency provision, along with a number of other positive reforms
It’s also a good sign that the American Diabetes Association has called for Congressional hearings on the drug pricing system and for transparency in the entire pharma supply chain, although the ADA doesn’t specifically call out PBMs. This issue has clearly gotten attention on Capital Hill, as four transparency bills have been introduced in the U.S. Congress in the last few months.
Congress has subpoena power and could, if it wanted to, force PBMs as well as drug manufacturers to come to the table and unravel some of the mysteries of the current pricing system. This would be critical to keeping a hot spotlight on both industries and increasing pressure for meaningful reforms.
Pressing PBMs to Step Up
Another approach advocated by some PBM-watchers is to make them “fiduciaries,” which means they would be duty-bound to act in the best interests of their clients, the health plan sponsors.
If this resulted in lower costs for the health plans, we consumers would benefit indirectly because our premiums would generally be lower!
Some states and the District of Columbia have taken this approach in proposed bills. But PBMs have fought tooth and claw against taking fiduciary responsibility and, thus far, they haven’t been forced to.
A few other potential approaches were bandied about at a recent Insulin Pricing & Access Workshop organized by Eli Lilly and attended by company executives, diabetes advocates and assorted experts.
Some activists I respect in our Diabetes Community were deeply suspicious of that meeting because a single pharma corporation footed the bill. They were right to be suspicious. At this point, though, anything that gets more insulin into the hands of Americans who desperately need it should be encouraged.
This DiabetesMine recap explains some of the good ideas discussed at the conclave, including going after employers to change PBM plans because they have the most “sway” over PBMs.
Indeed, it seems much of the workshop focused on benefit managers and what to do about them. But if the point was to have no-holds-barred brainstorming about solutions, why weren’t any PBMs invited?
As far as I know, PBMs have not been involved in any conversations on insulin prices with diabetes advocacy groups or other major stakeholders. It’s time to start bringing these benefit managers to the table!
To make political change, sometimes it’s necessary to combine fierce, in-your-face advocacy with calm rational discussions involving adversaries who are searching for solutions together. Both need to be tried simultaneously.
As Larry Smith and Larry Ellingson of the National Diabetes Volunteer Leadership Council put it in Morning Consult:
It’s imperative that all members of the supply chain, from PBMs to manufacturers, large employers to patient advocacy groups, come together to address the legitimate concerns of the public and lawmakers.
In summary, PBMs should be pressed and prodded to be transparent and to behave responsibly – and to actively participate in discussions on how to fix what is clearly a broken system. Any further ideas on how to press and prod them, beyond #PBMsExposed, are welcome!