The Pharmacy Benefit Manager & 3rd Grade Math
National Infusion Center Association Blog: From the Broomstick of Julie Baak
June 24, 2020
This is the 3rd grade math explanation of how Pharmacy Benefit Managers (PBMs) work:
PBM denies $300 drug. They then force the doctor to use the $1200 version made by the same company with a different label, and makes the price $1194. And then, BlueCross BlueShield of Tennessee (BCBST), for example, just saved the patient $6 whole dollars. Follow the money, it always tells the real story. This is the story of how BCBST is selling PBMs to the employers, particularly the self-funded employers, as a ‘cost saver,’ but the reality is far from cost saving… it is the exact opposite.
PBMs want everyone to think the issues are complicated, but truly, they are just as simple as 3rd grade math. In fact, one can apply the PBM mission statement to the grocery industry. Instead of Pharmacy Benefit Managers, let’s call them Grocery Benefit Managers. (GBM)
Imagine this: Grocery Benefit Manager (GBM) cuts a deal with EBT and WIC to pay less than the grocery owners’ price on a dozen eggs. The GBM, doing none of the work, then pays the Grocer $2 less than what he pays for every dozen eggs to cover the spread from the GBM deal with EBT and WIC.
Keep in mind – the grocer must pay cashiers, baggers, store rent, utilities, and more, and they are now is losing $4 per every dozen eggs sold. All they can do is hope that their store will make up the loss with additional revenue from customers shopping in their store.
This formula allows the middleman GBM to be the ONLY one who is doing nothing yet making all of the money. That is how PBMs work.
Additionally, we can take this one step further and have the GBM only allow the grocer to purchase eggs for EBT and WIC customers through their GBM Hen House. Now the GBM has every angle on this and the consumer has no choice if they have EBT and WIC but to take the GBM Hen House eggs which are not regulated and have no chain of custody. There is never any risk for the GBM because if the customer gets sick from the eggs, they’ll sue the grocer. The grocer then takes all the risk and makes a negative profit.
What does this mean? Well – you can replace the grocer with physicians and pharmacists and you have the BlueCross BlueShield of Tennessee (BCBST) cutting a deal with the Pharmacy Benefit Managers. Replace the GBM Hen House with the big PBMs (OptumRX, CareMark, ExpressScripts) and you package this up and sell it to employees.
Here’s the solution:
Patients NEED choices. An immediate ‘easy’ button solution is for legislators to make a ‘choice policy’ to allow the patient to request an override to ‘mandated’ PBM. If the PBM had to compete with the local independent pharmacies and independent physician infusion offices, then we could quickly see how many patients would be doing business with them. My experience and expertise tells me that no one would choose a PBM. I have been in the industry for 5 years and I have yet to see one happy patient of any PBM. I have spent hours on the phone with patients to try and get overrides for my patients that are mandated to PBMs. BCBST has come out and mandated all infusion drugs to PBM’s as of July 1, 2020. So now my BCBST patients are having to infuse at the hospital, which costs the patient and the insurance company more. The employers need to look at contracting directly with the physicians doing the work and cut out BCBST since they refuse transparency. Those who have nothing to hide, hide nothing. PBMs hide everything. Follow the money, it always tells the real story.