Salvatore J. GiorgianniI’ve been a pharmacist for more than 50 years. In that time, I’ve witnessed staggering medical advances. Patients now have access — at least in theory — to lifesaving medicines that seemed like science fiction just a decade or two ago.
But in practice, tens of millions of Americans struggle to obtain those drugs. In recent years, I’ve watched more and more patients approach the pharmacy counter, look at the required co-pay on the screen with horror, and glumly walk away without their prescribed treatments.
These patients have insurance. But all too often they can’t afford the out-of-pocket costs that remain after coverage kicks in.
The crisis stems, in large part, from the fact that big insurers like UnitedHealth, Cigna, and Humana don’t merely process claims anymore. Their parent companies control physicians’ practices and hospitals. They also own pharmacies and operate pharmacy benefit managers (PBMs) — the middlemen that determine which drugs patients can access and what they pay for them.
Today, just three PBMs control prescription drug access for roughly 80% of Americans. In virtually any other industry, that level of concentration would raise serious concerns about competition. Yet these vertically integrated conglomerates have warped the healthcare system to maximize their own profits — and gouge patients — every step of the way.
PBMs typically base patients’ out-of-pocket costs on drugs’ much higher “list” prices, rather than the discounted prices negotiated behind the scenes. Those inflated list prices only exist on paper, yet they justify higher co-pays while also generating larger rebates for PBMs and more profit for the companies that own them. In some cases, PBMs collect more from patients via co-pays or co-insurance than they actually reimburse pharmacies for dispensing a drug.
Sometimes, the conglomerates collect even more revenue by routing prescriptions through their own internal pharmacies — or demanding that patients use drugs manufactured by a subsidiary of a manufacturer that they own, even when cheaper alternatives are available. These practices hurt patients, disadvantage independent pharmacies, and interfere with the relationship between patients and their healthcare providers. This self-dealing is part of the reason that one in four Americans has skipped or delayed filling a prescription.
PBMs also profit by making it harder for patients to access the medicines their providers prescribe.
One of their most common tactics is prior authorization. Providers must justify prescriptions they have already determined are appropriate and wait for the insurer’s approval before patients can begin treatment. The process can delay care for days, weeks, or even months. Faced with those hurdles, up to eight in 10 patients forgo treatment altogether.
Then there’s “step therapy,” sometimes called “fail first.” Patients must first try one or more older, less expensive medicines before gaining access to the treatment their provider originally recommended. That may reduce short-term costs for insurers, but it can also delay effective care and, in some cases, seriously harm patients.
Together, these and other barriers contribute to unmanaged chronic disease, avoidable hospitalizations, and more than 100,000 preventable deaths every year.
Fortunately, Washington is beginning to crack down. The Federal Trade Commission has sued the nation’s three largest PBMs over practices that inflate drug prices. The Department of Labor recently proposed a rule that’d require PBMs to better disclose the fees and compensation they receive. And earlier this year, Congress passed legislation requiring PBMs to increase transparency and pass through more of the discounts they receive to employers.
It’s a great start — and a much more viable way to decrease Americans’ pharmacy bills than one of the other ideas frequently tossed around Capitol Hill. Some lawmakers want to mimic other nations’ price controls on prescription drugs. But artificially lowering what biotech companies charge for medicines would deter research investments — meaning that the pharmacists of the future will have fewer lifesaving drugs to dispense to patients.
Such price controls wouldn’t address the vertically integrated conglomerates that determine patients’ premiums, deductibles, and out-of-pocket costs. And they won’t prevent insurers and PBMs from using prior authorization and other rationing tactics.
Until policymakers decisively confront PBMs, Americans will continue to pay more, get less of the care they need, and be at risk of worse health.
Salvatore J. (Sal) Giorgianni, Jr, PharmD, CMHE is vice-president and cofounder of Healthy Men, a nonprofit dedicated to advancing the health of boys, men, and their families. He is chair-emeritus and cofounder of the American Public Health Association Caucus on Men’s Health.
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