Most employers have little idea what the pharmacy profit managers they hire do with the cash they trade for the medications their employees use, in accordance with a brand new KFF survey.
In probably the most recent KFF Employer Health Benefits Survey, company representatives were asked how much of the rebates that pharmacy profit managers (PBMs) receive from drug manufacturers is paid back to them. In recent years, the pharmaceutical industry has tried to deflect criticism of high drug prices by claiming that much of that revenue is diverted from PBMs, corporations that manage drug advantages for patients on behalf of employers and health insurers.
PBM executives say they save corporations and patients billions of dollars annually by getting rebates from drugmakers that they pass on to employers. Drugmakers, meanwhile, say they’re raising their list prices so high that they will afford the discounts that PBMs demand in exchange for including the drugs in formularies they make available to patients.
Leaders of the three largest PBMs – CVS Caremark, Optum RX and Express Scripts – all testified before Congress in July that 95 to 98% of the rebates they receive from drug manufacturers go to employers.
For the KFF survey of two,142 randomly chosen corporations, officials from corporations with 500 or more employees were asked how much of the rebates negotiated by PBMs return to the corporate as savings. About 19% said they received probably the most discounts, 27% said some and 16% said little. 37 percent of those surveyed didn’t know.
While a bigger percentage of officials at the most important corporations said they received most or among the rebates, the responses — and their contrast with statements from PBM executives — reflect employers' confusion or ignorance about what their managers are on the lookout for Drug advantages do, says survey leader Gary Claxton, senior vice chairman at KFF, a nonprofit health information organization that features KFF Health News.
“I don't think they can ever know how the money is moving because there are so many layers, between the wholesalers, the pharmacies and the manufacturers,” he said.
Critics say large PBMs – that are parts of conglomerates that include pharmacies, providers and insurers – can hide the scale of their rebates by negotiating through corporate-controlled rebate aggregators or group buyers, most of that are based abroad in tax havens and these siphon off a percentage of the cash before it hits the PBMs' books.
PBMs also earn money by encouraging or requiring patients to go to affiliated specialty pharmacies, by saving on payments to other pharmacies, and by collecting additional money from pharmaceutical corporations through the federal drug pricing program 340B, which goals to cut back drug costs for low-income earners patients, said Antonio Ciaccia, CEO of 46brooklyn Research.
The KFF survey shows how little employers understand PBMs and their pricing policies. “Employers are generally frustrated by the lack of transparency in all pricing,” Claxton said. “You can’t really know what’s true.”
Billionaire Mark Cuban founded an organization to undercut PBMs by selling drugs with transparent pricing policies. He tells Fortune 500 executives he meets: “You get scammed, you lose money because understanding how your PBM and health insurance contracts work is not your core competency,” Cuban said in an interview with KFF Health on Tuesday News.
Ciaccia, who has conducted PBM research for several states, said employers are unable to know PBMs' behavior and are sometimes surprised at how unregulated the PBM business is.
“The assumption is that employers want to pay less and pay more attention,” he said. “But what I learned is that they are often under-equipped, under-resourced, and often don’t understand how severe the lack of oversight and accountability is.”
Employers may assume that PBMs will act of their best interests, but they should not legally required to accomplish that.
Prices can apply anywhere on the map, even those charged by the identical PBM, Ciaccia said. In a recent Medicaid study he conducted, a PBM charged employers between $2,000 and $8,000 for a month of imatinib, a cancer drug available as a generic for just $30.
PBM contracts often guarantee discounts of certain percentage points for generic and brand-name drugs. But the contracts then contain five pages of exclusions, and “no employer will know what they mean,” Ciaccia said. “This person does not have enough information to form an informed opinion.”
The KFF survey found that corporations' annual premiums for coverage for individual employees rose from a mean of $7,739 in 2021 to $8,951 this yr, and for families from $22,221 to $25,572. Among employers' biggest concerns was find out how to cover increasingly popular weight-loss medications, which cost $2,000 or more monthly.
Only 18% of respondents said their corporations cover weight reduction medications like Wegovy. The largest group of employers offering such coverage – 28% – were those with 5,000 or more employees.
©2024 KFF Health News. Distributed by Tribune Content Agency, LLC.
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