As the practice administrator of Arthritis NW, one of the largest rheumatology treatment providers in the Pacific Northwest, I see our patients and clinicians grapple with access to prescription drugs every day. Since January, I have witnessed Pharmacy Benefit Managers (PBMs), systematically limit access to treatment for our most vulnerable patient populations and the providers responsible for their care.
PBMs are the middlemen in the prescription drug marketplace, and today, just three such companies control 80% of that market. They maintain top positions atop the Fortune 500 by siphoning millions of dollars out of the pockets of patients, community physicians, pharmacists and employer groups, while driving up costs and circumventing doctor-patient decision-making.
At the root of this problem is the power PBMs wield in determining which medications patients can access, how much they will pay out-of-pocket, and where they can access care. The perversity in the incentive structure is experienced every day by the clinicians in our network – when PBMs require patients to use therapies that maximize their own bottom line, rather than those that create the best health care outcome. Any tactics that switch medicines for stable patients for nonmedical reasons are fundamentally immoral.
If that weren’t bad enough, PBMs have started to apply co-pay accumulator or maximizer programs, which carve out co-pays and deductibles from assistance programs, leaving patients stuck paying the most out-of-pocket for the highest-margin medications on the market. Millions of Americans rely on assistance programs – like coupons, discount cards and vouchers – to afford their prescriptions at the point of sale.
Patients aren’t the only victims of PBM profiteering. Clinics and pharmacies working in underserved, rural communities are now threatened with their very survival. PBMs fight routine claims, delay payment and impose other administrative burdens to strip local providers of the ability to oversee patient care directly.
On this asymmetrical field, patient data is also being weaponized against community clinicians. Increasingly, PBMs are forcing doctors to disclose sensitive patient information so they can further monopolize the marketplace. With claims data from competing medical practices in-hand, PBMs use their leverage to steer patients toward higher-cost corporate care settings where they also have an ownership stake. This creates a vicious, reverse economy of scale – patients are forced into larger systems that are more expensive but create worse outcomes. Lesser-resourced community providers are powerless to stop this flood of predatory practices that favor payers over patients, stymie access, narrow options and curtail doctor-patient autonomy.
You don’t have to look far to find huge disparities in costs between payers in the system. Medicare enrollees only pay $35 for a month’s supply of insulin, while those on other insurance plans may pay between $175 and $300 out-of-pocket for the same drug. A recent report by IQVIA shows how this one example gets multiplied across the whole system. U.S. patients paid a record-breaking $67 billion out-of-pocket in 2019, while PBMs leveraged their position to capture half of all revenue from prescription spending – up 33% from just five years prior.
This issue is made worse by an insurance industry culture that places the burden on patients through high-deductible plan designs, layers of co-insurance, and ever-rising floors on cost-sharing. As the Kaiser Family Foundation discovered in late 2020, there was a 4% increase in premium cost for employer-sponsored plans paid for by working families last year alone – well over three times the rate of inflation.
Reforming the system should begin by imposing transparency onto PBM business practices to restore fairness to patients, providers and employers. We can lower out-of-pocket costs for the drugs patients need, but lawmakers must look at the entire health supply chain – starting with PBMs – to unwind the web of practices that block access and raise prices. This is a critical first step in addressing rising health care costs for families across Washington state.
Karen Ferguson is the Practice Administrator at Arthritis Northwest, and co-founder/CEO of Discus Analytics, Inc., a health care company specializing in the capture, analysis and application of actionable clinical data.
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