Lies, damned lies, and PBMs


By Devin Stone

PBMs have always seemed willing to spend a few dollars here and there to protect their bottom line, so it’s of no surprise to see the publication of a staunchly pro-PBM survey by Ayers, McHenry & Associates—a group that lists the Pharmaceutical Care Management Association as one of its clients.

PBM transparency is a feature of both the House and Senate versions of health care reform, and not too long ago U.S. Rep. Stephen Lynch (D-Mass.) proposed a bill that would greatly benefit patients and taxpayers alike by forcing PBMs to stop many of their questionable business practices in the Federal Employees Health Benefits Program (FEHBP).

I cannot comment on the specifics of the PBM survey because I do not know the questions that were asked to respondents, or how exactly they chose their sample, etc.  But I think it’s a pretty safe bet that none of the following questions were included:

  • “As someone who pays a monthly premium to be covered under the FEHBP, in your opinion, should you have the right to receive a monthly explanation of benefits demonstrating how your money was spent?”
  • “It isn’t uncommon for the pharmacy benefit managers that administer benefits for the FEHBP to limit which drugs patients are allowed to purchase. Given the rationing that is practiced, do you believe these companies should be required to report to the Office of Personnel Management the money they receive from pharmaceutical manufacturers that may influence their decisions?”
  • “Do you feel that prescription drug costs are about right, too low or too high in the FEHBP?”
  • “The FEHBP currently pays 15% to 45% more on prescription drugs than other government programs, according to the U.S. House Committee on Oversight and Government Reform’s Federal Workforce, Postal Service and the District of Columbia Subcommittee.  In order to cut costs, would you support the FEHBP implementing initiatives that are currently practiced in other government drug programs that have lower costs?”
  • “One definition of a fiduciary agent is someone that is required to work within and on behalf of the best interests of the person or group that they are providing a service to.  A recent report by Change to Win found that many federal employees pay more under a FEHBP plan administered by CVS Caremark than uninsured patients when shopping at a CVS pharmacy for a number of prescription drugs. Would you support legislation that requires CVS Caremark to operate as a fully transparent fiduciary agent for the FEHB health plans that it administers?”

I wouldn’t expect any of the above questions to be any more leading than those asked by the PBMs.

2 Responses to “Lies, damned lies, and PBMs”


  1. 1 Jim Fields March 12, 2010 at 7:12 pm

    I agree that the existing PBM model is greatly flawed and a financial detriment to both the pharmacy providers and the payers.

    However, while pharmacist and their lobbyist are looking myopically in rear view mirrors at the old PBM model, a new “Direct to Consumer” model is quietly developing.
    Walgreens and Wal-Mart both are seriously perusing this new model.

    This model has the potential to be much friendlier to the payer but could be devastating for independents. This devastation would go far beyond of the existing PBM model OR this model could be and enormous windfall for independents while destroying the OLD PBM model in the process. WIN –WIN

    Instead of wailing about wrongs of the past Independents and their National and State Organizations need to get out in front and use this new model to their advantage. The Old PBM model is losing steam with payers and governments alike, both looking for alternatives. We Independent pharmacist could and should be that alternative.

    Let us not fight the old PBM battle while Walgreens, Wal-Mart, and other chains outflank us using “Direct to Consumer” and cost plus business models.

    It is our choice whine about the past or look to the future.

    ApproRx offers you the future, by using local pharmacy providers for local governments and businesses thru a “Direct to Consumer” business model.
    Jim Fields RPh
    http://www.ApproRx.com
    1-513-897-1476
    1-866-900-3711

  2. 2 Christopher Young June 18, 2010 at 5:01 pm

    I have evidence of CVS Caremark’s unfair business practices on a daily basis:

    - They are ultra secretive about the 90 day supply retail reimbursement rates. This contract is encrypted and you have to jump through all sorts of hoops to get the decryption application only to find out that you will actually be paid less than you paid from the wholesaler for most brand name drugs and many generics if you fill a 90 day supply if CVS Caremark is the PBM.

    - CVS Caremark will require a new prior authorization be obtained if you have a different independent pharmacy or chain pharmacy fill certain higher cost medication under the auspices it is to make sure that the patient truly needs that drug. The problem is that this happens even if there is already a PA on file obtained by the previous pharmacy. More damning than that is if I get a “prior authorization required” rejection, I can send the patient with the same exact script over to one their retail stores and no PA will be required. They aren’t using the PA process to help control costs, they use it as a hurdle to steer patients to their retail and mail-order pharmacies.

    - As a PBM CVS Caremark regularly requires patients in certain pharmacy plan groups to utilize their specialty or mail order pharmacies only with no exception for retail to fill the prescription. This is despite the retail pharmacy having a contract in place already with CVS Caremark. This is a direct violation of the “Any Willing Provider” laws that we have in Tennessee which state that is you have a contract where you accept the reimbursement rates CVS Caremark offers, the PBM must allow you to fill the medication. This is applicable unless the plan is self-funded which is the case most of the time. CCVS Caremark already has a judgment against them regarding this from 2003 but the FTC and attorney general’s office don’t seem to care that CVS continues such practices.

    This is by no means a comprehensive list of practices CVS Caremark utilize (as does Medco and Express Scripts) to manipulate and steer customers to their mail order and retail pharmacy. However, I believe it does justify an investigation by the FTC or at least the Boards of Pharmacy and Attorney General at the state level. This issue isn’t difficult to grasp for those who aren’t in the healthcare industry. It is simply a case where the pharmacy benefit manager (PBM) gets to make the rules by which retail pharmacies provide services to patients but in doing so, the PBM makes it more difficult for competitors of their own retail pharmacies to operate. This is obvious patient steering and effort to monopolize as much of the market as possible at the financial expense of plan sponsors, and worse, patient care and attention we provide our customers.


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