Most employers have little concept what the pharmacy profit managers they rent do with the cash they change for the medicines utilized by their workers, based on a KFF survey launched Wednesday morning.
In KFF’s newest employer well being advantages survey, firm officers have been requested how a lot of the rebates collected from drugmakers by pharmacy profit managers, or PBMs, is returned to them. Lately, the pharmaceutical trade has tried to deflect criticism of excessive drug costs by saying a lot of that revenue is siphoned off by the PBMs, corporations that handle sufferers’ drug advantages on behalf of employers and well being plans.
PBM leaders say they save corporations and sufferers billions of {dollars} yearly by acquiring rebates from drugmakers that they go alongside to employers. Drugmakers, in the meantime, say they elevate their checklist costs so excessive with the intention to afford the rebates that PBMs demand in change for putting the medication on formularies that make them accessible to sufferers.
Leaders of the three largest PBMs — CVS Caremark, Optum RX and Specific Scripts — all testified in Congress in July that 95% to 98% of the rebates they gather from drugmakers movement to employers.
For KFF’s survey of two,142 randomly chosen corporations, officers from these with 500 or extra workers have been requested how a lot of the rebates negotiated by PBMs returned to the corporate as financial savings. About 19% mentioned they acquired many of the rebates, 27% mentioned some, and 16% mentioned little. Thirty-seven p.c of the respondents didn’t know.
Whereas a bigger proportion of officers from the biggest corporations mentioned they acquired most or among the rebates, the solutions — and their distinction with the testimony of PBM leaders — mirror the confusion or ignorance of employers about what their drug profit managers do, mentioned survey chief Gary Claxton, a senior vp at KFF, a well being data nonprofit that features KFF Well being Information.
“I don’t suppose they’ll ever know all of the methods the cash strikes round as a result of there are such a lot of layers, between the wholesalers and the pharmacies and the producers,” he mentioned.
Critics say large PBMs — that are components of conglomerates that embrace pharmacies, suppliers, and insurers — might conceal the scale of their rebates by conducting negotiations via corporate-controlled rebate aggregators, or group purchasers, largely based mostly abroad in tax havens, that siphon off a proportion of the money earlier than it goes on the PBMs’ books.
PBMs additionally generate income by encouraging or requiring sufferers to make use of affiliated specialty pharmacies, by skimping on funds to different pharmacies, and by gathering additional money from drug corporations via the federal 340B drug pricing program, which is geared toward reducing drug prices for low-income sufferers, mentioned Antonio Ciaccia, CEO of 46brooklyn Analysis.
The KFF survey signifies how little employers perceive the PBMs and their pricing insurance policies. “Employers are usually annoyed by the shortage of transparency into all the costs on the market,” Claxton mentioned. “They will’t truly know what’s true.”
Billionaire Mark Cuban began an organization to undercut the PBMs by promoting prescription drugs with clear pricing insurance policies. He tells Fortune 500 executives he meets, “You’re getting ripped off, you’re dropping cash as a result of it’s not your core competency to know how your PBM and medical health insurance contracts work,” Cuban instructed KFF Well being Information in an interview Tuesday.
Ciaccia, who has performed PBM investigations for a number of states, mentioned employers aren’t geared up to know the conduct of the PBMs and sometimes are shocked at how unregulated the PBM enterprise is.
“You’d assume that employers need to pay much less, that they might need to pay extra consideration,” he mentioned. “However what I’ve discovered is they’re typically underequipped, underresourced, and oftentimes not understanding the severity of the shortage of oversight and accountability.”
Employers might assume the PBMs are appearing of their finest curiosity, however they don’t have a authorized obligation to take action.
Costs may be everywhere in the map, even these charged by the identical PBM, Ciaccia mentioned. In a Medicaid research he lately performed, a PBM was billing employers wherever from $2,000 to $8,000 for a month’s value of imatinib, a most cancers drug that may be purchased as a generic for as little as $30.
PBM contracts typically assure reductions of sure proportion factors for generics and brand-name medication. However the contracts then comprise 5 pages of exclusions, and “no employer will know what they imply,” Ciaccia mentioned. “That particular person doesn’t have sufficient data to have an knowledgeable opinion.”
The KFF survey discovered that corporations’ annual premiums for protection of particular person workers had elevated from a median of $7,739 in 2021 to $8,951 this yr, and $22,221 to $25,572 for households. Amongst employers’ best considerations was the best way to cowl more and more standard weight reduction medication that checklist at $2,000 a month or extra.
Solely 18% of respondents mentioned their corporations coated medication equivalent to Wegovy for weight reduction. The biggest group of employers providing such protection — 28% — was these with 5,000 or extra workers.
