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Doctors: Decisions by PBMs make vital drugs unaffordable for many patients

The Columbus Dispatch


Dr. Stephanie Ott’s eyes tell the story of Americans’ frustrating struggles to obtain essential prescription drugs.


They moisten above her multi-hued mask almost to the point of tears as she describes a patient with crippling rheumatoid arthritis taking her first steps in years after successful drug treatment.


"I'll never forget. She was sitting in an (examination) room one against the wall and I didn't see a wheelchair. I thought, 'Well, I guess somebody took it out, right?'" Ott recalls.

"She says 'I want to give you a hug.' And I said, 'OK, I'll come right over.'


"And she says, 'Oh no, I'm coming to you.' And she got up and she walked across the room ...


"To this day, I get chills when I think about it. She's like, 'I can hold my grandkids!' She was so proud to tell me how she had swept her front porch."


But the doctor's eyes fill with anger as she relates how a Lupus patient was denied insurance coverage for a drug Ott prescribed, wound up in the hospital and remains on dialysis to this day.


And the Lancaster physician's visage hardens even more while diagnosing the cause of this mess: Multibillion-dollar pharmacy benefit managers and health insurers making decisions about which drugs should be covered by insurance based on what she says is corporate greed rather than medical need.


“It’s not that (a drug) didn’t work. It’s just that somebody’s profits got in the way. That's what I call practicing profit medicine instead of real medicine, because I’m trained to practice evidence-based medicine,” said Ott, who has been president of the Ohio Association of Rheumatology since 2011.


She is talking about a rapidly growing practice by pharmacy benefit managers, often known as PBMs, and health insurers to use something called "formulary exclusions." That sounds complicated, but it’s actually quite simple.


Formulary is a fancy name for the list of prescription drugs that a PBM says should be covered by health insurers. However, in the past several years, PBMs have come up with a separate list of drugs they say should not be covered by health insurance. Thus, they are excluded from the formulary, and known collectively as formulary exclusions.

'The perfect lose-lose for patients'

Because America’s health-care system is increasingly consolidated, the formulary decisions of just three pharmacy benefit managers essentially dictate the entire U.S. market, since they handle nearly 80% of the country's prescription drugs. All three PBMs also are corporately joined with major health insurers, magnifying the consolidation.


Since 2014, the number of drugs excluded from the trio's’ formularies has skyrocketed tenfold, to more than 1,300.


Representatives of trade associations for the PBMs and health-insurance companies say the new maneuver is an attempt to stem the rising cost of prescription drugs for U.S. consumers.


"PBMs develop prescription-drug formularies with pharmacy and therapeutic committees that are composed of primary care and specialty physicians, pharmacists, and other clinical professionals," said a statement from the Pharmaceutical Care Management Association, the national group representing America’s pharmacy benefit managers.


Those committees "evaluate available clinical evidence to select the best drugs for various conditions. This review focuses only on clinical considerations, including medical literature, Food and Drug Administration-approved prescribing information and safety data, and current therapeutic use guidelines – not economic or cost considerations."


Kristine Grow, senior vice president of communication for a national group that includes health insurers, AHIP, criticized drug makers for setting high prices while showing little transparency into their much-touted research and development costs.


However, Robin Feldman, associate professor at the University of California's Hastings College of the Law in San Francisco, says the problem with formulary exclusions reflects the truism at the heart of most discussions about excessive drug prices: The system is set up so that all involved benefit from higher prices — except those who pay those high prices.


"The core of the incentive problem lies with the PBM system. These middle players, who establish the drug formularies and negotiate between drug companies and the insurance plans, have evolved in a manner that creates upward pressure on prices," she said in an article for the Harvard Journal on Legislation.


"In short, it is the perfect lose-lose for patients. Manufacturers raise the price, the consumer pays the higher price, the extra goes to the PBM. And in exchange, the PBM creates competition-free zones for the drug company’s drug. In the short term, the patient pays more in the form of higher prices. In the long term, the patient pays more in the form of fewer competitors to offer lower-priced drugs." Continue Reading