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  • basykes via Creative Commons

What’s a pharmacy benefit manager? Exactly.

Turns out its one of those very profitable creatures that lives in an unregulated segment of an important product supply chain and makes money in crafty ways that most people don’t understand.

The last Cantwell amendment we’ll look at today deals with these pharmacy benefit managers, or PBMs as they’re known to people who take the time to know them. Basically, a PBM acts as the middleman between health insurance plans (Aetna et al) and pharmaceutical retailers (Rite Aid et al). It sets prices, chooses brands, figures out who gets what instead of what.

No surprise, there’s lots of potential for devious deeds, and as PBMs aren’t well-regulated, devious deeds have been occuring. “There’s just really no regulation over how they’re handling the business,” said Cantwell spokesperson Ciaran Clayton. “Because of this, it’s been found that sometimes prescriptions will be switched, without a patient’s knowledge, to save money for the pharmacy.”

Under this Cantwell amendment, which Finance Committee Chair Max Baucus recently incorporated into his draft bill, PBMs will have to share information about their methods with the appropriate government oversight agencies. Why wasn’t this happening before? Who knows. (Though I bet we all have a pretty good guess.)

Eli Sanders was The Stranger's associate editor. His book, "While the City Slept," was a finalist for the Washington State Book Award and the Dayton Literary Peace Prize. He once did this and once won...

6 replies on “The Cantwell Amendments: PBMs”

  1. Thanks for posting these – they’ve been really interesting.

    There is so much in the health care reform to discuss – it’s nice to see reporting on the actual policy and not just political shenanigans.

  2. What a great idea: Let’s sift through every piece of the byzantine bureaucracy built up around the business of making a profit off of sick people and try to reform each of those million pieces one at a time. That’s a much better approach than creating an alternative system that doesn’t operate on the profit principle and allowing people to choose that. After all, the resulting cheaper, more efficient and humane system might result in insurance companies going out of business, and we can’t allow businesses to fail just because their product is no longer necessary!

    That way, instead of the government operating a healthcare system much like Medicare, the government can operate a massive enforcement body tasked with going through the insurance companies’ books line-by-line looking for fraud and waste. Makes perfect sense. No big government!

  3. just a bit of a correction— the pharmacy is usually caught in the middle. It’s the PBM and/or the person’s insurance that sets up the “let’s change the drug to a cheaper generic” call. Yes the pharmacy can make a higher profit margin on a generic drug and we will offer to change to a generic alternative if the customer wants, but as a pharmacist, I will gladly go with the best drug for the patient or with what the patient or their doctor wants- even if it is a brand drug that we make a smaller profit margin on. I believe the doctor and patient should have the final word on their medication. BUT I can’t do that if the PBM says “claim rejected — use formulary drug A B or C” instead. Then the pharmacy has no more choice than the patient. You either take the drug that is covered by your plan or you pay for the original medicine on your own or at a much larger co-pay. I just want to get that out there, because many people who come to the pharmacy counter think that we at the pharmacy are making the final call on what the patient can have. It is not us, it is the patient’s insurance company and the associated PBM who agree or reject any given claim for a medication……
    Pharmacies are at the mercy of the PBMs also, because we have to either accept their contract or reject it. If we reject it, we may loose all the associated business with that PBM and that can be substantial. On the other hand, we may accept much lower reimbursement rates from a given PBM if they have a large enough market share to justify it.
    As I tell my customers…… call and complain to your insurance plan or PBM. I, the pharmacist, can’t change what you or your employer have contracted with them……

  6. It has nothing to do with saving money for the PBM. As everyone may or may not know, PBMs only get rebates for brand drugs. Therefore, dispensing a generic does not help their bottom line. These mandatory generic and step therapy programs are run by the PBMs on behalf of their clients (plan sponsers). Pharmacies are caught in the middle, but pharmacies and plans are the only ones reaping the benefits of dispensing a generic medication.

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