July 14, 2023

The biggest bog of all

A few months ago CMS issued its first guidance on the drug pricing controls legislated under the Inflation Reduction Act of 2022, and revised it last month (here). As everyone knows, Medicare couldn't until this legislation negotiate any drug prices with the industry – the VA being the only agency able to that – so I was hoping that the new law would remove those shackles quickly and irrevocably. 

But alas, only some changes looked promising (see the full timeline here), among them being: 
  • 2022 – rebates to Medicare if certain Part D drug prices increased more than inflation
  • 2023 – insulin caps ($35 a month per prescription)
  • 2023 – free vaccines for seniors
  • 2023 –  rebates to Medicare and lower coinsurances for certain Part B if prices increased more than inflation
  • planned for 2024 – no copays or coinsurances for people in the “catastrophic” phase of Part D.
Also in the timeline, spread over many years, is the IRA’s new Drug Negotiation Program for dealing with overpriced drugs. It looks grindingly slow.

They’ll select the first 10 high-priced drugs – really? only 10? – in 2023, letting us know the negotiated prices for these in 2024, and putting the new pricing into effect in 2026. In 2025-2027 and 2026-2028 there’ll be two more groups of 15, and 2027-2029 another 20. More specifics in the new guidelines, but I don’t know how anyone could think this slow-mo program is fair to consumers.  

The city is wanting to move us from Express Scripts into SilverScript. There’s no premium for either of these plans. The laws governing the healthcare components the city has to pay for do not include drug coverage, so we get “riders” for medications through our welfare funds.  The SilverScript rider will be cheaper than the current one, but it's still more expensive than the normal Part D plans in our local area. That's because most employer-negotiated plans have “open” formularies, which means all drugs are included, some in expensive tiers. Premiums for “closed” formulary plans cost less because certain brand names and higher tier medications are excluded altogether.

An interesting group called PissedConsumer has published some polling on which plan people like better, Express Scripts or SilverScript. Apparently they’re both disliked pretty much the same. 

The sample of people polled is small, but it does not reflect contentment.

Both Express Scripts and SilverScripts are actually not plans but Pharmacy Benefit Managers. I first heard about PBMs in a recent chat with my local pharmacist, though most of what he ranted about quite honestly went right over my head. The gist of it was that middlemen PBMs play a huge role in the distribution chain, and lots of the other components — patients, pharmacies, insurers, employers, other payers — just have to play along.

According to an April 2019 post by the Commonwealthfund
“PBMs are companies that manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other payers. By negotiating with drug manufacturers and pharmacies to control drug spending, PBMs have a significant behind-the-scenes impact in determining total drug costs for insurers, shaping patients’ access to medications, and determining how much pharmacies are paid.

Here’s the graphic they adapted from a Congressional Budget Office document of January 2007:

The only thing I can figure out in this picture is that the PBM is dead center, big, and I won't be getting a handle on most of this in my lifetime. 

Here’s what I did got from the rest of the article:
  • Rebates from the manufacturers (not publicly disclosed): Should PBMs be able to keep these or pass them through to insurers, who could then reduce premiums and copays? Pass-through amounts don’t always reach small insurers or employers. Reform would require PBMs to pass through rebates to patients. Reform would also require more transparency so federal and state policymakers could see what’s going on.
  • Spread pricing: in the case of generics, insurers and employers reimburse PBMs more than what the PBMs actually pay pharmacies for these. PBMs keep the difference and the schedules are “kept confidential” from the health plans. Reform would ban spread pricing altogether, so that insurers and employers would not overpay. 
The recurrent themes in what I've been reading are the lack of transparency, the use of opaque contracts to maximize profits, shorting pills, selling patient data, misrepresentation, covertly shifting patients to higher-priced drugs, the pocketing of manufacturer rebates, and similar bad practices. Bottom line: nobody can figure out what’s going on. 

Katherine Eban writes in a Fortune magazine article of Oct. 28, 2013: 
Express Scripts vehemently insists it saves money for clients and that the vast majority are satisfied with its service. And like any company – to state the obvious – it’s entitled to a profit. The question is, Who is making out better – the PBM or its customers? Many experts say the former. They argue that many companies stick with traditional PBMs because drug pricing is so impossible to untangle that customers have no way to verify how much they’re saving, if anything.   ...  The PBMs’ claims of cost savings are difficult to prove or disprove. Drug pricing is an almost impenetrable bog.
She quotes a PBM auditor as saying: “The nation’s employers are being taken for a ride.”

And she says a VP of one of the more transparent PBMs puts it this way: “Basically it’s a ‘confuse-opoly.’ Buyers don’t understand the PBM industry, and that’s why they hire consultants – who don’t understand it either.” 

You’ll be paying different copays for your drugs in SilverScript. That’s what I found out when I priced my expensive drug over the phone at the number the OLR has been giving out for questions about the new plan: 1-855-648-0389. Maybe you’ll have better luck, but one of mine ended up way more expensive in the new SilverScript plan than what I’ve been paying in Express Scripts.

And the thing is, I’ll never know why.


  1. I think we currently pay 125 for express scripts and will pay 134 if we get Aetna silverscripts. You will notice that neither party talks about PBM or even tries very hard to change things --- Dems make a few noises once in a while. Bernie talks generalities but never specifics -- his missing link and why he is boring already -- same line for 40 years.

  2. Right: $125 in Sr Care, but the Aetna would have been $103.50 / month. The current Emblem is a whopping $177.59 -- very high indeed. As for Bernie, you're so right. He has not kept up to date on this. I wish Katie Porter would do her white-board for PBMs. She'd need 10 whiteboards. (PS : I still wear my Bernie tee-shirt, though. He's better than most.)