3 arrested after Central Lafourche bomb scare
December 1, 2015
Ruth Cross
December 2, 2015
Errol Duplantis and other local pharmacists are concerned about the state of their industry, and they’re starting to speak up.
Pharmacists here and across the country have sought to have businesses take a closer look at whom they employ as their pharmacy benefit managers, or PBMs. But just what do these PBMs do?
The Pharmaceutical Care Management Association (PCMA) represents PBMs. According to its website, PBMs administer prescription drug plans for more than 250 million Americans with health insurance policies. PBMs aggregate the buying power of millions of customers, and leverage that combined power to negotiate lower drug prices from drug manufacturers and drugstores.
A 2011 study by the consulting firm Visante and prepared for the PCMA estimated that from 2012 to 2021 PBMs would save plan sponsors and consumers almost $2 trillion compared to drug purchases made without PBMs, registering about 35 percent savings. The study also said that individual plan sponsors could see savings in the range of 20 to 50 percent over the same time frame, depending
on how much each sponsor adopts the practices recommended by its benefit manager.
However, some pharmacists have expressed concerns about how much savings the PBMs are actually providing customers and how PBM policies affect their businesses. Duplantis is the 2015-16 president of the Louisiana Pharmacists Association and has represented Louisiana at “three or four” national meetings with other pharmacists. He said that he has noticed that pharmacists from all parts of the United States want to make a larger effort to educate the public on PBMs’ effects on the healthcare market.
“We think that, us as pharmacists across the country, are saying hey, to our communities, this is something we think you all need to be evaluating and looking at,” Duplantis said.
David Dorsey is a pharmacist in St. Martinville, and questioned the Visante report’s $2 trillion figure. He said that PBMs also charge people managed care fees, which result from working with doctors and pharmacies on what drug to prescribe patients based on the PBM’s list of drugs it covers, thus lowering the cost. While the cost of the actual drug drops off, the fees associated with them still present a real cost, according to Dorsey.
“In the end, it might be cheaper prescription-wise because they’re nickel and diming us, but they’re making it up on the back end with rebates on drugs, and they’re making it up on managed care fees,” Dorsey said.
Duplantis said that some PBMs make large profits by negotiating large rebates from drug manufacturers, but not passing those rebates in full onto the customers and pharmacy, called a “spread.” Duplantis said that such companies operating with large “spreads” could pay a pharmacy $5 and then charge the insured entity any price they choose. According to him, pharmacists have suggested that companies look at transparent pass-through PBMs, which charge clients what they charge pharmacies, while tacking on an explicitly disclosed administrative fee.
A group of pharmacists from Terrebonne went to the Terrebonne Parish School Board meeting to ask the board to examine if they could find more savings by using a pass-through PBM with their employee health plan. The area drug vendors asked the school board to provide data on its current prescription drug agreement for a third party to evaluate in comparison with another PBM. As of now, the evaluation is underway.
According to Duplantis, Southern Scripts is currently the only pass-through PBM in Louisiana, and it has been expanding its market share.
“Louisiana does have a pass-through transparent PBM that has come through in the last year. It’s the only one so far, and they’re gaining a lot of ground. They’ve moved on from Louisiana and are doing a lot of business in a lot of states,” he said.
A 2011 paper by Milliman, an insurance consulting firm, compared pass-through PBMs to those that use spread pricing, also known as lock-in pricing. According to the paper, lock-in pricing generally has higher spreads on generic drugs, giving PBMs an economic incentive to push cheaper generic drugs over brand names, which pushes down costs.
“Generic prescriptions, even with the higher spreads, are almost always the better option for the plan from an overall cost perspective, and member out-of-pocket costs are almost always lower as well. Conversely, this economic incentive to strongly encourage generic substitution is often weaker under pass-through pricing, where the PBM is financially indifferent to generic dispensing rates,” according to the Milliman paper.
The paper also found that pass-through PBMs promote transparency and can promote competition based solely on the fees each company clearly charges. Duplantis himself values such transparency, as he said that in the market’s current state, PBMs are largely unregulated. The federal government has started to take notice, as members or the House Subcommittee on Regulatory Reform, Commercial and Antitrust Law held a hearing on Nov. 17 concerning competition in the PBM market.
At the hearing, congressmen expressed concern about three PBMs, CVS Health, Express Scripts and OptumRx, controlling almost 80 percent of the entire market. They also considered PBMs that own their own community pharmacy businesses leveraging their market power to benefit their own businesses through exclusivity arrangements.
Duplantis has said that pharmacists in Terrebonne Parish are open to talking to any business about its agreements with PBMs to see if better options are available. He said during this current local economic downturn, all companies are looking for savings anywhere they can find them.
“It’s not rocket science,” he said. “But our society, with all the changes taking place, doesn’t have room for these amount of monies to be left on the table for folks that aren’t brining anything to the table.”
It’s the only one so far, and they’re gaining a lot of ground. They’ve moved on from Louisiana and are doing a lot of business in a lot of states.’
Errol Duplantis
President of the Louisiana Pharmacists Association speaking about Southern Scripts, the state’s only pass-through PBM
Local pharmacist Errol Duplantis prepares to work at his store’s compounding room. Pharmacists across the country are expressing concern about costs associated with pharmacy benefit managers (PBMs).
Pharmacists around the country are worried about costs associated with PBMs.
