Rx to save patients money: Lift Big Pharma ‘gag orders’ on pharmacists

Big Pharma’s notorious middle-men, aka prescription benefit managers or PBMs, are coming under yet more fire — this time over so-called gag orders that they impose on pharmacists they work with, preventing these front-line health care providers from telling patients about cheaper options for drugs.

The New York Times reported that states are leading the push, and soon may be joined by the federal government, to bar companies from preventing this money-saving practice.

Independent pharmacists say that PBMs won’t work with them, if, for example, they tell patients that a brand drug they’ve been prescribed will cost them $125 if they use their health insurance but $100 if they pay cash. Why would the benefit managers do this? Because such a step cuts into their pay, which already may be considerable.

Here’s why: In an unintended consequence of an effort to check soaring drug prices, major employers, insurers, and drug makers helped to launch prescription benefit managers, only to see these middle-men rise in influence and profitability. The benefit managers work with employers, drug makers, insurers, distributors, and pharmacies, dickering over costs and prices, including by establishing lists of products and what should be paid for them (see the Kaiser Health News explanatory video, above). If they wring efficiencies out of the drug supply chain and money gets saved, including with discounts and coupon programs, PBMs take those sums as their share.

But parties they deal with — including drug makers, insurers, and major employers — don’t know details how benefit managers make their money or how much. Their finances can be a “black box” mystery, though it is clear they’re becoming more profitable and powerful than intended, the New York Times says.

The Wall Street Journal reported that financial analysts scrutinized profit margins disclosed by the biggest PBMs. They were low, in the single digits. But outside financial experts noted that benefits managers included in their financial reporting hefty costs for drugs sold — even though they never take delivery of products. That means their actual overhead costs stay low. They don’t have sales, administrative, amortization, or depreciation costs. By taking reality into consideration, PBMs become “exceptionally profitable,” the Journal reported.

The very profitability of these operations, however, may be their own undoing, too. Insurers and pharmacy chains are jumping in to set up PBMs they control. Analysts are watching to see if corporate America — notably the recently announced health care cost-mind alliance of Amazon, Berkshire-Hathaway, and JPMorgan Chase — also find ways around the drug middlemen.

And while it may be briefly satisfying to enjoy the schadenfreude of Big Pharma and insurers finding someone else beating them to their beloved buck, in my practice, I see not only the major harms that patients suffer while seeking medical services but also their struggles to access and afford safe, quality health care. Drug costs keep heading skyward, pushing up patients’ already high anxiety and desperation, driving medical debt, bankruptcies, and the ever-rising cost of U.S. health care.

Individual patients should protect themselves against drug rip-offs by talking with their doctors and pharmacists and doing their own skeptical research, perhaps some online (with lots of caution), and by shopping around. They may want to consider if generics may be a less-expensive option, though Big Pharma’s trying to make these supposedly lower-cost alternatives too pricey to bear, too.

It’s good to see state lawmakers step up to help consumers try to save money by nixing pharmacist gag orders. But federal officials need to do their part — and more — to dig into if and how much PBMs and their practices may be boosting already onerous drug prices, and then to actually do something about it.

In case anyone needs their blood pressure to spike, Martin Shkreli, the smirking hedge-fund brat who became notorious as “Pharma Bro,” resurfaced recently: He’s now calling himself a “fool” and throwing himself on the court’s mercy as a federal judge decides his sentence in his securities fraud case. He’s a smirking twit and deserved the public whipping he got from members of Congress, outraged that he and other hedge-funders were buying up small drug companies with patents or control of niche medications, then hiking the products’ costs to exorbitant levels. Pharma Bro did this with Daraprim, an infection-fighting drug that those with serious conditions like HIV-AIDS consider life-saving.

For all the Washington outcry, and the purported launch of a generic alternative, Daraprim — once $13.50 a pill — hasn’t budged from the nose-bleed Shkreli-set price of $750 per pill.

That’s not just sad, it’s unacceptable. And we Americans, gouged to the nth degree by Big Pharma, need to let our elected officials and taxpayer-supported regulators know that their impotence in oversight can’t continue.

Patrick Malone & Associates, P.C. listed in Best Lawyers Rated by Super Lawyers Patrick A. Malone
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