The endless inventive ways of screwing American health care consumers

As long as there is huge profit to be made in American health care (and, oh boy, is there) companies and industries will keep finding ways to screw over Americans until we get some of the meaningful reforms that hold down costs in other countries.  NYT’s latest on how we are being screwed by Pharmacy Benefit Managers: (this is an important one– gift link)

Americans are paying too much for prescription drugs.

It is a common, longstanding complaint. And the culprits seem obvious: Drug companies. Insurers. A dysfunctional federal government.

But there is another collection of powerful forces that often escape attention, because they operate in the bowels of the health care system and cloak themselves in such opacity and complexity that many people don’t even realize they exist.

They are called pharmacy benefit managers. And they are driving up drug costs for millions of people, employers and the government.

The three largest pharmacy benefit managers, or P.B.M.s, act as middlemen overseeing prescriptions for more than 200 million Americans. They are owned by huge health care conglomerates — CVS Health, Cigna and UnitedHealth Group — and are hired by employers and governments.

The job of the P.B.M.s is to reduce drug costs. Instead, they frequently do the opposite. They steer patients toward pricier drugs, charge steep markups on what would otherwise be inexpensive medicines and extract billions of dollars in hidden fees, a New York Times investigation found.

Most Americans get their health insurance through a government program like Medicare or through an employer, which pay for two different types of insurance for each person. One type covers visits to doctors and hospitals, and it is handled by an insurance company. The other pays for prescriptions. That is overseen by a P.B.M.

The P.B.M. negotiates with drug companies, pays pharmacies and helps decide which drugs patients can get at what price. In theory, everyone saves money…

“We’re really, really good at what we do,” Jon Mahrt, president of UnitedHealth’s P.B.M., Optum Rx, said in an interview. The main lobbying group for the P.B.M.s says that in 2022 they saved their clients and patients $286 billion.

But those savings appear to be largely a mirage, a product of a system where prices have been artificially inflated so that major P.B.M.s and drug companies can boost their profits while taking credit for reducing prices.

The Times interviewed more than 300 current and former P.B.M. employees, patients, physicians, pharmacists and other industry experts, and reviewed court documents and patient records. The investigation found that the largest P.B.M.s often act in their own financial interests, at the expense of their clients and patients. Among the findings:

• P.B.M.s sometimes push patients toward drugs with higher out-of-pocket costs, shunning cheaper alternatives.

• They often charge employers and government programs like Medicare multiple times the wholesale price of a drug, keeping most of the difference for themselves. That overcharging goes far beyond the markups that pharmacies, like other retailers, typically tack on when they sell products.

• The largest P.B.M.s recently established subsidiaries that harvest billions of dollars in fees from drug companies, money that flows straight to their bottom line and does nothing to reduce health care costs.

• The P.B.M.s, which are responsible for paying pharmacies on behalf of employers, are driving independent drugstores out of business by not paying them enough to cover their costs. Small pharmacies have little choice but to accept these lowball rates because the largest P.B.M.s control an overwhelming majority of prescriptions. The disappearance of local pharmacies limits health care access for poorer communities but ultimately enriches the P.B.M.s’ parent companies, which own drugstores or mail-order pharmacies.

• P.B.M.s sometimes delay or even prevent patients from getting their prescriptions. In the worst cases, patients suffer serious health consequences.

This part especially grabbed me– my son Alex is on this drug!

Mr. McKinley has gastrointestinal cancer. For years, he had been getting his cancer medication, a generic version of everolimus, through the mail from a division of CVS devoted to expensive, or specialty, drugs. He hadn’t realized he could go elsewhere to fill his prescription.

A few years ago, after Mr. McKinley’s medication was delivered and left on his porch, his neighbor’s dog chewed up the package. Mr. McKinley tried to get CVS to send a replacement, but he said a representative refused.

He went to the nearby Hobbs Pharmacy to see if he could get the prescription there.

The pharmacist, Russell Hobbs, made a startling discovery. Mr. McKinley’s insurance paperwork showed that CVS was charging Oklahoma $138,000 a year for Mr. McKinley’s everolimus. But the online portal that Mr. Hobbs used to buy drugs from wholesalers indicated that he could procure everolimus for about $14,000.

The $124,000 difference reflected the approximate yearly profit that CVS was collecting just on Mr. McKinley’s prescription at the expense of Oklahoma taxpayers.

“We were getting ripped off,” Mr. McKinley said.

The Times shared the details of Mr. McKinley’s case with Oklahoma’s attorney general, Gentner Drummond, who has been looking into the P.B.M.s. He called the case “alarming and concerning.”

Mr. McKinley’s situation wasn’t a fluke. The Times also found several instances of CVS charging Oklahoma thousands of dollars more for generic multiple sclerosis drugs than what those same drugs would cost at online pharmacies like the one created by the billionaire Mark Cuban.

Employers often don’t know they are being overcharged. Nor do they have much say over which pharmacies are available to their workers. “We do not have insight into the individual pricing of certain medications,” said Christa Helfrey, a spokeswoman for the agency that oversees Oklahoma’s insurance program for state employees.

The price that CVS Caremark is currently charging Oklahoma for generic everolimus recently declined sharply. Mr. Joyner, the Caremark president, said the P.B.M. has been cutting prices for some generic specialty drugs in response to pressure from clients.

I’d like to know how much the taxpayers of North Carolina are getting screwed for Alex’s medication (in his case, related to his rare disease, not cancer). I just may follow up on this.  

[Also, a nice summary in today’s Morning newsletter]