Not so fast, PBMs: You aren’t fooling consumers

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By Robin Strongin, Senior Director of Health Policy

A recent op-ed, “It’s Time for Facts in the PBM Debate” by the president of one of the nation’s largest pharmacy benefit managers (PBMs), is at odds with the reality of what consumers are facing when we go to the pharmacy.

In his commentary, David Joyner paints a rosy picture of how the largest PBMs lower drug prices. Meanwhile, consumers across the country are being hit with higher out-of-pocket costs and a lack of understanding about what goes into the costs for their medicines. This opaque system results in consumers running into several issues trying to access more affordable drug options.

The PBMs aren’t fooling anyone.

In Joyner’s own company, a whistleblower brought suit over the PBM’s scheme to keep lower-cost generics off its formularies for Medicare beneficiaries, pushing seniors to more expensive drugs (for which the PBM had negotiated higher profits for itself). The whistleblower said she was told by company executives that the financial benefits of this manipulation outweighed the possibility of getting caught.

More recently, community pharmacies in Iowa filed a lawsuit against CVS Health and its Caremark PBM claiming that they violated antitrust laws and illegally collected fees from pharmacies filling Medicare prescriptions. We’ve seen this behavior often force trusted, and long-established local pharmacies out of business.

What’s most concerning is that such questionable PBM behavior can have tragic results beyond pharmacy closures. In Wisconsin earlier this year, a young man with severe asthma died after he was informed at the pharmacy that his inhaler was no longer covered by insurance and he couldn’t afford the hefty out-of-pocket cost.

We can’t let this happen to another person. Consumers deserve more transparency. They deserve accountability in this middlemen PBM system. Most of all, we all deserve better than to be inundated with large PBM falsehoods.

Even as these mega-PBMs assure us that they are patient advocates, they are fighting tooth and nail in Congress and state legislatures to block measures that would take the necessary steps to ensure that consumers – and not the PBMs themselves – actually benefit.

Those are the facts in the big PBM debate.

NCL responds to Senators Crapo, Wyden announcement on needed PBM reforms

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March 14, 2024

Media contact: National Consumers League – Melody Merin, melodym@nclnet.org, 202-207-2831

Washington, DC – The National Consumers League (NCL) today released a statement following Senators Ron Wyden (D-OR) and Mike Crapo (R-ID) recent press conference announcing their push to include bipartisan PBM reforms in the broader funding package.

The following statement is attributable to NCL Chief Executive Officer, Sally Greenberg:

“For far too long now, PBMs have been taking advantage of our drug pricing system, finding ways to increase their profits without delivering value to consumers. Now, after years of investigations, pharmacy closures and high out-of-pocket costs, our leaders are doing something about it. By disconnecting Medicare prescription drug costs from PBM profits, this legislation will address one of the many ways PBMs use the system to their financial advantage. Congress has a huge opportunity to help seniors better afford and access the medications they need. We urge Congress to get this done without delay.”

Learn more about NCL’s work to address the PBM problem here.

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About the National Consumers League (NCL)

The National Consumers League, founded in 1899, is America’s pioneer consumer organization.  Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad.  For more information, visit nclnet.org.

PBM reforms needed now in order to expand access to lower cost biosimilars that would benefit all Americans

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February 22, 2024

Media contact: National Consumers League – Melody Merin, melodym@nclnet.org, 202-207-2831

Washington, DC – The National Consumers League (NCL) recently submitted a letter to the U.S. House and Senate leadership expressing our collective support for Pharmacy Benefit Managers (PBM) reforms to improve consumer and patient access to biosimilars. Given the ongoing surge in prescription drug costs, expanding access to lower cost biosimilars represents a bipartisan solution that would benefit all Americans.

“We are hopeful PBM reforms will be included in a final March healthcare package,” said NCL CEO Sally Greenberg.

The letter can be found here.

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About the National Consumers League (NCL)

The National Consumers League, founded in 1899, is America’s pioneer consumer organization.  Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad.  For more information, visit nclnet.org.

PBMs claim new programs will save consumers money. Let’s take a closer look.

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By Robin Strongin, Senior Director of Health Policy

Consumers have known for quite some time now that the prescription drug pricing system is essentially a black box. Dealings among drug manufacturers, health insurers and pharmacy benefit managers (PBMs) establish which drugs insurance will cover and make accessible to consumers. What’s more, the prices that consumers pay for those medicines vary wildly – often leading to high out-of-pocket costs for us all.

Two of the three major PBM companies that are in the middle of this drug pricing web recently announced that they are establishing new programs (CVS’s CostVantage and Express Scripts’ ClearNetwork) that set transparent formulas for drugs with a pre-set markup and a flat fee for the PBMs. On paper, this sounds like a great idea.

But consumers would be wise to take these claims with a healthy grain of proverbial salt. We know PBMs continue to find new ways to put themselves over patients (more on that here) and we must demand answers to the issues the PBMs are still skirting. For example:

  • Will these new programs actually make prescription drugs more affordable and reduce out-of-pocket costs at the pharmacy counter? Notably, both Express Scripts and CVS Health have acknowledged that employers and plan sponsors may not save any money from this move. There is no sign either that consumers will be able to get the drugs they need for a fair price.
  • While the companies boast increased transparency, they still have not shared – nor said they will share – how much they are paying to acquire the drugs that will be dispensed to patients. PBM clients have long sought this information, but it appears that data will still be hidden in the black box.
  • In the case of CVS Health, the changes the company announced will only be effective at CVS-owned pharmacies. It will not affect how CVS will reimburse millions of prescriptions at the local and independent pharmacies it doesn’t own. A cynic might say this is just another mechanism by CVS to drive more patients to its own pharmacies.

Most notably, nothing CVS Health and Express Scripts have announced will change one of the pervasive anti-consumer elements of the drug pricing system. In their dealings with drugmakers, they can still cut deals that will determine which medicines get preferential placement. This means PBMs could continue to push consumers toward higher-priced drugs and limit access to more affordable generics and biosimilars.

It’s no coincidence that Congress is getting closer to passing PBM reform legislation that would mandate transparency, force the PBMs to pass their negotiated savings from drugmakers to consumers and remove the incentives for PBMs to push consumers to higher-priced drugs. One might say that these moves by CVS and Express Scripts are cosmetic attempts to ward off legislation by touting their own self-reforms.

But, as with so much that goes on in the drug pricing game, these “reforms” may not be what they seem. We need Congress to step in for consumers to help ensure we’re no longer facing a big disadvantage at the pharmacy counter.

Learn more about the PBM problem at nclnet.org/pbms.

NCL statement on PBMs and new GAO report

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September 18, 2023

Media contact: National Consumers League – Melody Merin, melodym@nclnet.org, 202-207-2831

WASHINGTON, DC – The National Consumers League (NCL) today released a statement following a recently released U.S. Government Accountability Office (“GAO”) report on Medicare Part D rebates.

The following statement is attributable to NCL Chief Executive Officer, Sally Greenberg:

“Investigation after investigation, report after report, and study after study prove that pharmacy benefit managers (“PBMs’) do not provide benefits to consumers. To the contrary, we believe PBMs, who are middlemen, drain billions of dollars that should be going into the pockets of patients and consumers and help them defray their healthcare costs. The evidence mounts that PBMs, which once had a noble purpose, have lost their way and become profit centers unto themselves, adding costs to our drug supply system at the expense of patients. This latest report by GAO underscores that our nation’s seniors – often our most vulnerable patients who rely most on medications – pay the highest price for PBM practices.

“In just one year, GAO found that the PBMs collected almost $50 billion in rebates from prescription drug manufacturers under the Medicare Part D program alone. These savings should go directly to Medicare beneficiaries, but for the nearly 80 of the highest rebated drugs analyzed, GAO found that seniors paid more than $20 billion, while their plan sponsors — often vertically integrated with PBMs — paid only $5.3 billion. PBMs are able to enrich themselves because they control access to prescription drugs, block competition, conduct business in the shadows, and pocket discounts meant for patients. PBMs simply driving up out-of-pocket costs for Medicare beneficiaries to the tune of millions of dollars.

“Congress has an opportunity to enact meaningful PBM reforms to prevent such behavior. We urge our leaders in Congress to closely examine the findings of the GAO report, and put a stop to the practices of PBMs to profit off of vulnerable patients. In doing so, our elected representatives will put money back in the pockets of patients and help them to better afford the medications they need.”

Learn more about NCL’s work to address the PBM problem at nclnet.org/pbms.

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About the National Consumers League (NCL)
The National Consumers League, founded in 1899, is America’s pioneer consumer organization.  Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad.  For more information, visit nclnet.org.

The National Consumers League sent a letter urging Senate Committee on Commerce, Science and Transportation to ensure that consumers get a fair deal at the pharmacy

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February 21, 2023

Media contact: National Consumers League – Katie Brown, katie@nclnet.org, 202-823-8442

Washington, D.C. – The National Consumers League (NCL) sent a letter urging Senate Committee on Commerce, Science and Transportation to ensure that consumers get a fair deal at the pharmacy. When it comes to the high out-of-pocket costs consumers face at the pharmacy counter — often for lifesaving medications — consumers today have an unfair disadvantage.

“With three PBMs controlling nearly 80 percent of all prescription drug claims, it is timely that lawmakers are looking at PBMs’ role in driving up the cost of drugs to consumers and patients,“ said Sally Greenberg NCL Chief Executive Officer. “We are encouraged to see the committee looking into the workings of PBMs and we are supportive of your efforts to hold these entities accountable.”

Beyond addressing the antitrust issues and increasing transparency of PBM revenue streams, we encouraged legislators to:

  • Remove medication barriers: PBMs should not be allowed to limit access to the medicines doctors prescribe.
  • Require PBMs to pass on savings directly to consumers: PBM rebates should be shared so that consumers can benefit from more affordable out-of-pocket costs. Additionally, patient cost-sharing should be based on the net cost of the drug, not the list price.
  • Ensure simple, single administrative PBM fees: PBMs too often tack on arbitrary fees to local pharmacies, with many independent and community pharmacies struggling to stay in business, this trickles down to the consumers, resulting in increased prices and pharmacy closures, leading to many communities facing pharmacy deserts.
  • Ensure PBM profits are not tied to the costs of medications: The system currently incentivizes PBMs to favor medicines with higher list prices so that they can negotiate larger rebates and/or steer patients to medicines with higher price tags to increase their own profits.

With the many evolving ways PBMs too often put profit over consumer interests, it is crucial that federal consumer protection agencies like the FTC have the tools needed to address the PBM problem.

To view the full letter, click here.

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About the National Consumers League (NCL)
The National Consumers League, founded in 1899, is America’s pioneer consumer organization.  Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad.  For more information, visit nclnet.org.

NCL Director of Health Policy testifies at Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights on how consolidation in the marketplace harms consumers

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June 16, 2022

Media contact: National Consumers League – Katie Brown, katie@nclnet.org, (202) 207-2832

Washington, D.C. – On Wednesday, June 15, 2022, the National Consumers League’s Director of Health Policy Jeanette Contreras provided oral testimony to the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights on how consolidation in the marketplace harms consumers.

In her testimony, Ms. Contreras discussed the importance of consumers having choices for safe goods and services at a fair price, a core principle of NCL’s advocacy work. Touching on several issues impacting consumers in the U.S. – such as the infant formula shortage, consolidation of the airline industry, primary ticketing market for live events, and the unfair business practices of pharmacy benefit managers (PBMs) – Ms. Contreras reiterated the need for competition in the marketplace and enacting stronger antitrust laws, all of which help protect U.S. consumers.

Her testimony appears below.

June 15, 2022

Good afternoon Chairwoman Klobuchar, Ranking Member Lee, and members of the Subcommittee. My name is Jeanette Contreras. I am the Director of Health Policy at the National Consumers League. I appreciate the opportunity to testify remotely today- due to COVID.

Founded in 1899, NCL is America’s oldest consumer advocacy organization. A core principle of our advocacy is that the marketplace should encourage competition to guarantee that consumers have choices for safe goods and services at a fair price. Monopolies harm competition, leaving consumers with fewer options at higher prices. Monopolistic practices are especially harmful when they occur in the health care arena, where they can exacerbate health disparities.

We share the concerns of new parents regarding the recent shortage of infant formula. Our hearts go out to those parents who have lost babies or whose infants suffered devastating health consequences from contaminated formula. At NCL, we believe all goods and services sold to consumers should be safe and meet all legal requirements- including regulatory guidelines set forth by the FDA.

NCL applauds the FDA and the Administration for adopting a multifaceted approach to increase the supply of infant formula, including temporarily allowing foreign manufacturers to sell their products in the U.S. Additionally, we believe invoking the Defense Production Act to prioritize getting needed inputs to infant formula manufacturers was sound policy. These measures are helping to solve the immediate logistical problem of getting formula onto store shelves across the country.

While addressing the immediate formula shortage is most urgent, we are also troubled that it took the FDA almost four months to act on a whistleblower complaint sent to the agency. This complaint should have received immediate attention given the gravity of the allegations against the Abbott facility. We support a full investigation and, if warranted, bringing criminal and civil charges against those who falsified data. NCL also recommends that the U.S. create a single food safety agency and dedicate an office to overseeing the safety and supply of infant formula.

It should concern every American that one manufacturer controls 40% of the U.S. infant formula market. Only three companies — Abbott, Mead Johnson, and Nestle — control 98% of the industry.

Consolidation in the infant formula industry is a major contributor to the current crisis, but it is only one of many cases where market concentration in recent decades has limited competition and harmed consumers.

For example, NCL continues to raise concerns about the consolidation of the airline industry. Due to weak enforcement of existing antitrust laws, from 2005 to 2015, the number of major U.S. airlines declined from nine to four. And today they control more than 80 percent of the domestic U.S. market.

Our antitrust laws have also failed to protect consumers who attend live events. After merging with Ticketmaster in 2010, Live Nation Entertainment controls roughly 80% of the primary ticketing market in the U.S. As anyone who has purchased tickets recently can attest, this has led to an increase in add-fees and the basic price of tickets.

Stronger antitrust enforcement would be especially beneficial for curtailing anti-competitive conduct in the health care industry, where we’ve seen consolidation lead to higher costs for consumers without an increase in quality or access to care. We are pleased that the Biden administration is looking into how hospital prices increase after acquisitions. We are also hopeful that the ongoing review of DOJ & FTC merger enforcement guidelines will result in more action by those agencies.

NCL also applauds the recent FTC decision to open an investigation into the unfair business practices of pharmacy benefit managers or PBMs. NCL works tirelessly to raise awareness of the outsized role that PBMs play in driving up prescription drug prices for consumers. According to a recent report, the three biggest PBMs controlled roughly 77% of all U.S. prescription drug claims in 2020. And a recent Senate Finance Committee report found some PBMs are getting a 70% rebate on insulin, while out-of-pocket costs for this life-saving medication continue to rise.

These cases are just a few examples of how monopolies and anti-competitive practices have become a problem for consumers. To ensure crises like today’s formula shortage do not happen again, market consolidation must be addressed so that the temporary shutdown of a single factory does not result in the collapse of an entire supply chain.

Whether it is baby formula, airline travel, live event tickets, or pharmaceutical sales, the lack of competition is having increasingly negative impacts on consumer welfare and requires urgent action.

Chairwoman Klobuchar, Ranking Member Lee, thank you for holding today’s hearing and inviting NCL to speak about this important issue. I look forward to answering your questions.

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About the National Consumers League (NCL) 

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.

 

The National Consumers League applauds the FTC’s decision to investigate PBMs

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June 14, 2022

Media contact: National Consumers League – Katie Brown, katie@nclnet.org, (202) 207-2832

Washington, DC— NCL is deeply concerned by the lack of transparency and accountability surrounding pharmacy benefit managers (PBMs). The pervasive power of PBMs in the pharmaceutical industry has raised out-of-pocket costs for consumers and made it more difficult for them to receive essential medical treatment. NCL believes that the FTC’s investigation into PBMs represents a significant first step to addressing these issues.

The PBM system was originally intended to work on behalf of employers, health plans, labor unions, and states, to negotiate with drug manufacturers and process prescription drug claims. However, as their power and influence in the market has grown, there are major concerns that PBMs have increasingly prioritized profits, with consumers paying the price.

With the highest profit rates of any corporations in the prescription drug supply chain, PBMs have pocketed more than $450 billion in revenue in 2020, a stark $150 billion increase from eight years ago.  More concerning is that now, just three PBMs account for approximately 77 percent of all equivalent prescription claims.

PBMs often demand that drug companies provide them “rebates” or discounts to offer medicines as part of a drug benefit plan. While implemented to lower consumers’ out-of-pocket costs, these theoretical consumer savings seem to be nonexistent. In addition, to increase profits, PBMs intentionally steer consumers to higher-priced drugs, regardless of patient and treatment considerations.

As the most prominent PBMs have vertically integrated with the largest health insurance companies, they are employing monopolistic-like practices to increase prescription prices, limit consumer choice, and stifle market competition. NCL is encouraged that the FTC is taking preliminary action to hold PBMs accountable. In addition to this investigation, policy-makers and the FTC must continue to address the lack of regulatory oversight with the utmost urgency.

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About the National Consumers League (NCL) 

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.