By Alec Pruchnicki, MD
Most people are aware of the continually rising prices for medications. Besides the practices and prices imposed by the pharmaceutical companies, there are also limitations by insurance companies which often pay some of the costs, and there is a new player in the field: Pharmacy Benefits Managers (PBMs). A recent WestView article explained the problem with these middlemen from the viewpoint of pharmacists and patients (“Community Pharmacists Rally to Advocate for Patients Rights,” November, 2019). This article will look at the problem from the viewpoint of doctors and patients.
The assisted living facility where I have my practice (“Assisted Living: Not Just for the Wealthy,” WestView News, February 2020) is supported by Medicaid. Every resident is enrolled in Medicare, and 90 percent, the so-called “dual eligible” patients, are also enrolled in Medicaid. Until December of 2005 they received their drug coverage from New York State Medicaid. Virtually all medications were available, although a few required a prior authorization (“PA”) from Medicaid, which occurred about once a month in my practice. Costs were controlled by the state by requiring generic medications whenever possible.
In January, 2006 Medicare started Medicare Part D to give drug coverage to those Medicare recipients who didn’t have adequate benefits, and this was beneficial for those who had inadequate coverage. The federal government also took over all state Medicaid drug plans. But the way that was done was probably the worst way possible.
All the drug plans were privatized. Instead of dealing with one unified government program, doctors and pharmacists now had to send prescriptions to dozens of private companies, which is what the Pharmacy Benefits Managers are. Each one had different formularies (lists of drugs that were covered) different regulations, and different procedures for getting a PA when needed. Instead of getting one or two PAs a month, I now get one or two a day. Some require a trip to some website, or a phone call, or a form to fill out. Sometimes, after spending time to get the PA, the drug is still rejected and I have to either change to another medication that will be covered by the PBM, or engage in a time-consuming and often futile appeal process. How much these PBMs skim off the top to cover their own costs is usually unknown. What is known for sure is that this process is significantly time-consuming for the physician, frustrating for the patient waiting for an approval, and futile in controlling costs.
This last point is most important. The administration of George W. Bush decided that the private sector could do a better job of controlling costs than the government could. Instead of setting up a government-run program like the states had, or like the Veterans Administration has, these private and often profit-making companies were going to rein in costs. Not only was Medicare itself stopped from setting up its own plan to compete with the private companies, but it was banned by law from being involved in price negotiations at all. Not only would the plans be privatized, they would be completely free to set their own policies and prices. If you are familiar with the increased drug prices over the last 15 years, you know that depending on the private sector to control costs has failed miserably.
The states have tried to regulate some of the PBMs by requiring more transparency, but this has problems. Governor Cuomo recently vetoed a bill to do that because he said it would violate the restrictive federal rules. There are no significant initiatives by the Trump administration to solve this problem either. Single payer advocates, such as myself, believe that a more regulated system would get rid of much of the privatization-caused problem along with many others. Know that when your doctor can’t get you the medication you need at a reasonable cost, or maybe at all, it is the pharmaceutical companies and the PBM middlemen that are standing in the way.
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