Understanding your Prescription Plan

Understanding your prescription plan: PBM's what are they are who are they working for?
A PBM (Pharmacy Benefits Manager)  - what you need to know:

There are 2 websites that offer great insight into the Affordable Care Act  both with a similar title:
 1. Pros and Cons of the Affordable Health Care Act 
2. Obamacare Facts - Pro's and Con's of the ACA

By design, your PBM works FOR your employer. Most employers are looking to reduce their costs for providing Healthcare. So the impetus is on the shoulders of their selected PBM to provide the company with as low cost a health care plan as they can while still providing a broad selection of coverages for their employees and their beneficiaries.
Medicare Part D: forever changed the Healthcare landscape in 2007. Millions of Seniors who previously had no access to a PBM, now not only had but every year each state in November posts a list of PBM’s for the residents to peruse and select one that best suits their prescription/Healthcare needs. 
Each year the PBM’s all present to the states their various plans in the hope to be selected as one of the plans offered. Part of the discovery process for the average person is to check each plans formularies (http://www.amcp.org/data/jmcp/Letter-359-360.pdf ) One of the major problems with a PBM formulary has to do with a simple Catch 22. That is, while the patient must enroll for the full calendar year with the PBM or face harsh penalties, there is no law requiring the PBM to HONOR that formulary for the entire year. So many people are frustrated when they select a PBM based upon the formulary that best mirrors  their prescriptions only to discover months in the PBM has CHANGED their formulary.

Part Two: The Reality
Part of a PBM’s plan to reduce health care costs is simply to cut out the middle man, aka local pharmacy. When you have a prescription filled at your local pharmacy here is what occurs behind the scenes. Your pharmacy needs to control THEIR costs by reducing on shelf inventory. To do that they first make sure that they stock the items their regular patients have been prescribed. Their goal is to purchase those drugs at the lowest cost they can possibly get for the drugs.

In the United States there has been a tremendous consolidation of pharmacy distributors (wholesalers) in the past 5-10 years. While there are still local and online only distributors the big 3 are Amerisource, Cardinal Health and McKesson. When a pharmacy chooses a distributor, in order to achieve the lowest possible cost of goods, they are enticed in to entering a contract, the major wholesaler’s offer a cost of goods based upon total volume plus benchmarking the per cent of that total volume that is generic vs name brand, keep in mind the wholesaler makes a much better profit if it sells a larger per cent of generic than name brand  product.

All three wholesaler’s use different schematics to price their products thereby further compounding the difficulty for the local pharmacy to distinguish between the three. A pharmacy in negotiating a contract with a distributor encounters a case of comparing apples to oranges when trying to effectively compare the tenants of each contract, it is a virtually impossible task.

Once a pharmacy has obtained the drug and dispensed it, the next step is to ensure the PBM is going to pay for that drug. Remember the PBM’s job is to provide the lowest possible cost of health care to the employer. A pharmacy first needs to find if the drug is approved by the plan, or if the prescribed regimen by the physician is approved by the plan. If the first hurdles are completed, the pharmacy then inputs what they paid, or the cost of the drug and are allowed to input what is called a dispensing fee, which is the cost of dispensing that drug. Over the past few years this is where the PBM’s have ratcheted down their payments to the pharmacy. If the PBM has found that drug could have been purchased somewhere else in the country at a lower price, then it will reject what the pharmacy paid and only reimburse the pharmacy for what it says is the “proper” cost of the drug. Next they will reimburse what they consider to be THEIR cost of dispensing. Dispensing fees were designed  to provide the pharmacy with a way of recouping all those fixed costs that are part and parcel of operating a pharmacy, i.e., cost of rent, utilities, payroll, etc.

Obviously if the PBM only reimbursed the pharmacy based upon a cost of the drug only few would be able to survive. However, much like they do with costs of drugs, the  PBM’s decide what THEY feel is a fair dispensing fee, usually showing no regard to what the actual costs of running that pharmacy are. The simple way to lower the PBM’s  costs of a prescription are simple, let THEM dispense the drug and mail it to the patient. The PBM’s are large enough to buy the drugs direct from the manufacturer, their dispensaries are conveyor belts and robotics with only a need for Pharmacists to oversee and inspect. No need for them to worry about individual fixed costs since  their volume is huge compared to the local pharmacy.

So what are YOUR downsides to mail order?
• You can’t get a prescription filled right away. That means you can’t use a mail-order pharmacy for drugs to treat sudden illnesses.
• You can’t talk in person to a pharmacist about things such as a drug’s side effects. THIS is a huge point for your local pharmacy. Prior to mail order the patients brought their entire “profile” of medications to their local pharmacy. In fact most patients called the Pharmacist “Doc” in no small part because the Pharmacist knew their profile, knew their medications prescribed to them from more than one physician, etc. In fact the local pharmacist was their health care specialist.  When a plan moves your “maintenance drugs”, the prescriptions you take daily, to mail order, the only drugs they let you take to your local pharmacist are the drugs for  immediate illness, the penicillin’s, the pain medications and similar. Your pharmacist no longer knows everything you are taking. Yet what happens when the patient has a  question about their prescription? Ever try calling the PBM? It is far easier for that patient to call or go back to their local pharmacy and check with “Doc”. It becomes a pressure point for the local pharmacist then. If you haven’t noticed since the inception of mail order there are far fewer of those local neighborhood pharmacies than there were 10 years ago.

• Mail order pharmacies can sometimes leave your doctor drowning in red tape. Many mail order pharmacies are known to send out multiple faxes requesting that  doctors use specific medications, instead of the ones the doctors prescribed. Unless the doctor calls the pharmacy and clears things up, the company won’t send out the prescription, leaving patients waiting desperately for their medication.

This begs the question -Who is really in charge of your health care? Is it your Doctor or your employer by way of a PBM? In the United States today there is the  illusion that your doctor is the “captain” of your healthcare ship, when in reality it is, for nearly 80% of insured Americans, it is really your employer. The next time your prescription is not filled, your test requested by your doctor ‘denied’ or your choice of healthcare provider is not “approved” you need to complain to the source, and for many that is your employer. The second place you need to go is your states department of insurance and file a complaint with them against your PBM  or health plan. You will of course have to go through the obligatory appeals process and complaint system within your plan – but then by all means please file a complaint with your department of insurance. Lastly, and a step few take – please inform your national representatives, yes those in Washington DC – your Congressmen/woman and Senators – if they think our “system” works – they are living in a bubble – time to pop the bubble and change the system.

 To contact your Congressmen or Senator click here