The Story of the middlemen PBM’s –
“Wolf in Sheep’s clothing”
PBM’s serve as middlemen administering prescription plans for insurance companies. This middlemen industry has been reduced to 3 major companies due to mainly lack of regulation creating monopolies and driving up prices. Below Video from NCPA explains the PBM story.
Here is a small sample of some of their unfair, anti-competitive practices:
1.“Spread pricing” – on top of commission earned for administering prescription plans for insurances, PBM’s now also take a “cut” out of reimbursement to participating contracted pharmacies. Akin to “protection money” paid to mob bosses. Why? there are only 3 companies which run ALL prescription plans – private, medicaid, medicare. If you don’t sign a contract with 1 of the 3 you cannot survive as an independent.
2.Clawback – Insurance charges $10 copay to patient, then turns around and takes back $9 from pharmacy….sounds ridiculous right? IT IS!! IF PBM are supposed to save money, what is the practice of clawback?? Why not charge patient $1 copay instead. Read more in our about section and follow our blogs for ongoing litigation updates.
3.Rebates & Pay for Play – Sounds like 3rd world corruption scheme right? That’s because it is. The practice of negotiating rebates for brand medication is responsible for upto 50% of a drug’s retail price. Guess what?? PBM’s get commission on negotiating rebates. Are you surprised that drug prices go up each year higher than inflation rate? the PREFERRED drugs on your insurance plans are lower copay because they PAID to be on the formulary (pay for play) not because the drug was better.
4.Mandatory mail order – well by now you can guess the next scheme. If you keep all the business in-house, you can drive competition out and make more money. SOOOOO… a PBM says to insurance, if you mandate that all your members get mail order prescriptions, we will charge you $9.95/Rx vs $10. That is a 5% saving for insurance company so a no brainer right?? well, on the face of it, every practice that PBM’s engage in, seems good. But now by giving up 5% PBM capture the whole market…an easy tradeoff. Next year the PBM will increase rates to insurance by 5% and then keep both market share and money. On other hand, patient has less access to pharmacist expertise, gets meds delivered automatically even when not needed or discontinued, meds can get damaged/lost in mail. Above all the mail order pharmacy can get reimbursed HIGHER than local pharmacy, is mail order really saving insurance money….no way to know cause PBM’s are not regulated. Thanks to inaction by legislators around the country, they have grown to be the “TOO BIG TO FAIL” monsters.
The above points are just a teaser…many more anti-competitive practices are happening daily. “About IPMD” page will give you more details of the PBM abuses/practices. Join our Newsletter to get updates on our activities and events near you. Follow our facebook page and go to links from resources page to learn more about why drug prices are going up in this country and why PBM’s are one of the major causes. We hope that once you have understood our causes your will call on your Maryland state & national legislators, Governor, MD House speaker & Minority leader, MD Senate president & Minority leader to support PBM transparency legislation.
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