We talk about drug costs a lot…why are PBM’s excluded from this discussion?


Welcome to my first article of hopefully many on the topic of all things pharmacy. I am Pharmacy Stan, I have worked in the industry for over 18 and I don’t like what I see at all.

Recently I came across a lovely article here on LinkedIn that discussed the under utilization of generic drugs in Medicare Part D annual expenditures and it questioned why prescribers, pharmacists and patients were not held accountable. This really irked me. How can we blame the parties ignorant to the actual costs and not the ones setting them?

Prescribers don’t have a good grasp on even the retail cost of many medications unless its super expensive and causes a lot of prior approvals. Patient’s only think of the cost in terms of their copay, and pharmacists, like doctors are slaves to KPI’s, customer service is usually a top one.

I then came across an article (https://aspe.hhs.gov/system/files/pdf/259326/DP-Multisource-Brands-in-Part-D.pdf) and this is where I said, “Wait a second… lets compare this to the part D formularies of the big 3 (OptumRx / UnitedHealthGroup, Express Scripts / Cigna and CVS / Aetna). Are they enabling these numbers? Are they inflating them? Why has this been a topic for 2 decades now and we still have made little enough progress because we still talk about it all the time even if it accounts for such a tiny fraction of the annual healthcare expenditure.

In 2016 our total healthcare costs for the country was 3.3 trillion. (https://www.ama-assn.org/sites/ama-assn.org/files/corp/media-browser/member/health-policy/prp-annual-spending-2016.pdf) We stood to save 3 billion according to the source article by using generic meds… less than 1% of our total spend. That makes this all sound pretty petty but I guess it is ingrained in me that our patients come before profits and blaming them for a systemic issue caused by the PBM, just doesn’t sit well with me.

Anyways I searched the source article list against 2016 formularies from each of the big 3 to see if I was correct in my suspicions and I was.

Here are the formulary examples I used:

  1. OptumRx: http://hr.fhda.edu/_downloads/OptumRx_2016_Formulary_Prescription_Drug_List.pdf
  2. CVS: https://www.mdaprograms.com/Portals/4/Silver%20Scripts%20-RX%20Formulary.pdf – its from 2017, as I didn’t see 2016 anywhere however since there foot notes include a lot of estimation, for the sake of this point, lets say I am estimating too.
  3. Express Scripts: https://www.express-scripts.com/art/medicare16/pdf/16pdp_formulary_choice.pdf

Here are my findings:

  • Crestor is on all 3 PDP formularies for the basic (cheapest) plan options. Tier 3 with ESI, 4 with CVS and 2 with OptumRx. So on all 3 plans the patient can request the brand and there was no prior authorization necessary to choose brand over generic. This is what the PBM enabled. If a patient simply pays a higher copay but knows where and what their drug does for them, they are happy right?

Let’s make sure we are clear on this: the patient chooses brand over generic. Doctors and Pharmacists are enslaved to KPI’s that include customer service.

  • Nexium was tier 3/3/2 across the board. What I also found fascinating is that they said the patients OOP expense for brand Nexium is $55.00 v $41.84 for generic. A 1000 ct bottle of generic Nexium(esomeprazole) costs an independent pharmacy ~$100.00 so for 30 pills of generic Nexium being quoted at $41.00 means the markup is better than booze at a bar. All this profit for your healthcare and on your tax dollars.

To be clear on my stance – I am not saying patients shouldn’t get brand either, achieving outcomes is more important to me than anything. Brand, generic, non pharmaceutical, whatever it may be. I think to solve brand v generic we need to talk about “fillers” and dyes that are not the same as the brand. They matter. They change the way a drug is metabolized or can cause other negative side effects. Only the main ingredient is the active drug. Tablets can have 3 to as many as 12 fillers additional and they do not have to, and almost never match the original brand patented tablet.

  • Gleevac only had its generic released in 2016 after multiple court battles to extend its patents. Availability of generic Gleevac in 2019 was bleak. I don’t remember the exact issues but even from 50 wholesalers it was not available. Aside from actual raw material shortages, the legal battles will cause long delays in when you can actually obtain a generic and when it is simply off patent. At least this did request a PA on all 3 plans, and to note that with OptumRx you had to fill via their specialty pharmacy (no one else’s since without their rebate aka kickback, they can’t make profit).
  • Unithroid – was only on ESI’s mail-order plan but it was a tier 1!! I also wonder how many claims for Synthroid etc were somehow billed for Unithroid. In 18 years I have seen Unithroid very rarely across the east coast. I have seen it from ESI’s mail order though when patients are trying to transfer to whatever store because their mail order didn’t come on time as usual.
  • Femara brand costs the pharmacy several hundred or up to $1600 if I remember correctly and the generic is about $3.00 a bottle for 30 pills. Femara was tier 3 on ESI in 2016. No PA required.
  • Namenda which is also a cheap generic was a good example to add to this list. While the brand required a PA, the generic also required a PA. Often cheaper options are gate kept by the PBM, while they let those who pay to play, keep their expensive brand options on the formulary even when it costs everyone else more money. Generic manufacturers are often owned by Brand manufacturers as well, for example Pfizer and Greenstone, Novartis and Sandoz so this likely involves gaming the formulary here too.

Aside from this list several brand drugs like Adderall XR, Concerta, Advair, Estrace cream, Lialda etc have been on what PBM’s call DAW9 program. I mention this because this list of DAW9 drugs are given by the PBM’s to the pharmacy. They are all extremely expensive and the generics are more than 50% discounted to their brand counterparts. Yet thanks to rebates, we bill your insurance thousands and hope the PBM passes the rebate on to your plan. Of course, little rebate retention transparency is displayed by the PBM even if that seems like it would be in the best interest of their client (the plan sponsor).

So my question is why are we focused on how we can save money by switching more people to generics via requesting a pharmacist, a physician or even the patient to be accountable, when the players who set the rules are the only ones who truly know the cost of anything in the system?

I would love any and all feedback so that I may improve for future articles and content. I know my writing is an opportunity and has kept me from writing on the industry in the past. 2021 is all about facing fears for me so I welcome the constructive criticism. My DM’s are open @pharmacystan – email: stan@pharmacystan.com or text me: 646-683-4668

Let’s talk pharmacy and how we can make a difference!

This article is also published on my linkedin page: https://www.linkedin.com/pulse/we-talk-drug-costs-lotwhy-pbms-excluded-from-stanley-warren/

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