You don't have to, but you should

You Don’t Have to Boycott CVS


For some reason Google thought this Slate article would interest me.


I can't imagine why.


Maybe it's because they know how universally adored PBMs are for sticking it to the greedy pharmacies, doctors, drug manufacturers, investors, and other stakeholders. They bring down healthcare costs by the billions! Now this sneaky little upstart The Pill Club is trying to smear their beloved name by using hot button issues like women's access to healthcare to curry outrage! How dare they!!



That poor record just got scratched. Hard.


Well, I'm here to straighten out the record. Pun intended.


The author of this Slate article may have had the best of intentions. It seems she wanted to provide the broader picture of what's happening behind the scenes to prove this issue isn't about women's healthcare access, but rather a business spat. The problem is, she didn't go broad enough. She needed to back up a bit farther, because this ISN'T just about women's health in America. It's about EVERYONE'S health. Yours, mine, your neighbor's, and their dog's.


Her subtitle says "The dispute over birth control has everything to do with corporate profits and little to do with health care."


Fact is, it has everything to do with both.


She goes on to say, "In fact, far from necessitating a boycott of CVS, I’d suggest, the company’s pharmacy benefit manager is doing consumers a favor."


Ms. Botella, I understand why you would say so, and it's because the PBM industry has done an excellent job of protecting their secrets and misrepresenting their actions to the public. They've pulled the wool straight down over your eyes, and if you aren't deeply involved in the world of pharmacy benefits or pharmacy in general, you'd never know the difference. You say, "Insurers turn to pharmacy benefit managers to help them negotiate lower prices for drugs." Which is exactly what every PBM wants you to believe. Unfortunately, it's not the whole truth.


In order to explain this, we have to go on a little history trip down memory lane. Where did PBMs come from?


Over 20 years ago, how did pharmacies and drug manufacturers and wholesalers get paid for the medications they provided? Overwhelmingly, medications were paid for out of pocket, by patients. Some could submit receipts to their insurance for reimbursement, but it was a slow and cumbersome process by today's standards.


2003 came along, and the Medicare Modernization Act of 2003 came with it. Suddenly, prescriptions were a covered benefit of Medicare Part D plans. Technology had greatly advanced at that point and the days of submitting paper receipts were over, as all claims were submitted electronically. The process was faster, more efficient, and you would immediately know whether the adjudication was successful (aka, did the insurance cover the claim, or would you have to pay out of pocket for this medication?).


PBMs developed as a link between pharmacies and insurers or "plan sponsors" (like employers). They provided the electronic processing service that allowed that instant communication.


That's awesome, right!?!?! Efficiency, speed, on-demand cost and copay information??


That is awesome.


Unfortunately, that's not the way this rodeo remained.


PBMs gradually learned that they could insert themselves in this space by taking on more of a policing role. They controlled the communication of claim adjudication (approval of payment). They began to market themselves to insurers as a way to control drug spending by managing which drugs would be paid for and which would not. They also began to control what doses, quantities, and versions of medications your insurance would pay for.


How do they do this? In an ideal world, the altruistic PBM would cause the insurance companies to pay for the most cost-effective therapeutic options. They'd limit covered quantities to scientifically supported courses of therapy. They'd pay pharmacies fairly for the medications and care they provide to patients, and keep medication costs down by reducing overspending on unnecessary or excessively expensive medications.


Well, there went that poor record again. I hope it's not irreparably damaged.


Here's what they actually do:


1) They cause the insurance companies to pay only for their "preferred drugs". Which drugs do they prefer? The answer: whichever drug manufacturer gives them the biggest rebate in exchange for placement on the list of covered drugs.


2) They keep part (or all) of that rebate for themselves each time a claim is paid by the insurer for that drug.