How Do Pharmacy Benefit Managers Make Money?

How do you negotiate with PBM?

Contracts with pharmaceutical benefit managers might be difficult to understand in some cases. The following are some pointers that might assist employers in navigating the PBM terminology and mechanics. Define brand pharmaceuticals and generic drugs. Request that the PBM identify brand drugs and generic drugs based on a national pharmaceutical market research service such as First DataBank.

1. Specify the coding standards for brand and generic drugs.
2. Defining ‘claims’ — Propose language that specifies that claims will not include duplicate, reversed, or rejected claims in order to ensure that the PBM reimburses when money is due and does not overcharge on processing fees.
3. This can be done by ensuring that claims will not include duplicate claims.

Having an understanding of costs – Demand that the PBM elucidate the pricing techniques for each and every one of its covered medications. Ask the pharmacy benefit manager (PBM) about any potential conflicts of interest, such as financial relationships with medication makers, such as rebates, as well as with pharmacies and other interests.

Claiming rebates: Request that the PBM locate and communicate with any and all potential rebate providers. Audits: Determine how you will evaluate the performance of the PBM and put out a plan. Contracts that are not too long should be reviewed or renegotiated at least once every two years. Obtain a list of the PBM’s speciality pharmaceuticals and ask for approval rights before any modifications are made to the list.

This step is part of the classification process for specialty drugs. Mail order and speciality medications – Many PBMs have their own mail-order pharmacies in addition to providing this service to their customers. You should make sure that the price you pay for a specialty or mail-order medicine is the same as what the PBM pays for that drug.

In the event that the PBM refuses, you should request to examine the price difference between the reimbursement the mail-order pharmacy got and the fees you incurred. In the event that it is unsuccessful, try negotiating for lower administrative fees. Fee breakdown – Make sure you ask the PBM to break down the administrative costs they charge.

Some businesses offer a single, all-inclusive price for their services, while others bill separately for each particular service. Copayments: Copayments should not exceed the cost that is charged by the pharmacy for the medication. Plan updates: Inquire with your PBM about having the plan revised every three months in response to the introduction of new medications on the market.

What is wrong with PBMs?

SUMMARY: Roughly forty percent of American adults report that they are unable to afford their routine prescription medications, and one third of those individuals report that they have delayed or not filled a prescription because of the expense at least once.

1. The spread of COVID-19 has made the situation worse by contributing to the loss of jobs and health insurance as well as the postponement of normal medical care.
2. Policymakers in Rhode Island are aware that the rapidly rising cost of prescription drugs has to be brought under greater control.
3. Regrettably, they have disregarded a crucial factor in determining costs, namely pharmacy benefit managers (PBMs).

PBMs such as CVS Caremark, Express Scripts, and OptumRx “manage” prescription medication coverage on behalf of insurers and siphon off substantial earnings in the complicated and non-transparent system that delivers pharmaceuticals from manufacturers to patients.

1. PBMs are also known as pharmacy benefit managers (PBMs).
2. Other states are doing a far better job of monitoring and supervising PBMs, which has resulted in cost savings of hundreds of millions of dollars for consumers and taxpayers.
3. They should serve as an example for Rhode Island to follow.
4. Please sign this petition if you want to encourage officials in Rhode Island to take action.

This article also comes with a fully annotated version, which can be found here. What exactly is a PBMS? The majority of patients and the healthcare providers are separated by middlemen known as health insurers or “payers.” These “payers” receive money from patients, distribute part of it to providers of healthcare, and retain some of it for themselves.

• Because of all of these different payers, the cost of healthcare in the United States is almost twice as high per person as it is in other developed countries that employ the “single payer” system.
• Pharmacy Benefit Managers are located in the center of the healthcare industry, between patients, payers, and pharmacies (PBMs).

PBMs: Middlemen for middlemen PBMs, or pharmacy benefit managers, are for-profit businesses that “manage” the prescription drug benefits of more than 266 million Americans on behalf of payers such as private insurers, Medicare Part D drug plans, government employee plans, large employers, and Medicaid Managed Care Organizations.

1. Make a list of the medications that are covered by the insurance (“a formulary”)
2. control how much medication is used by subscribers (for example, by instituting co-payments, prior authorization policies, and so on)
3. pharmacies that are participating in the program should be reimbursed for their services.

This essay is going to concentrate on:

• Who Are Pharmacy Benefit Managers and What Do They Do? (PBMs)
• How the use of PBMs is harmful to both consumers and taxpayers
• Control of Pharmacy Benefit Managers in Other States
• Possible Obstacles in the Way of Regulatory Reforms
• How RI Can Rein in PBMs

WHO ARE PHARMACY BENEFIT MANAGERS (PBMS)? PBMs originated in the 1970s as tiny independent intermediaries between insurers and pharmacies, receiving a predetermined fee for processing claims. Since then, the industry has grown significantly. Today, three pharmacy benefit managers (PBMs) dominate eighty percent of the industry and are a component of enormous conglomerates that are vertically integrated.

• CVS Caremark holds a 32 percent stake of the market, and its parent company is CVS Aetna.
• Cigna is the parent company of Express Scripts, which has a 24% market share.
• UnitedHealth is the parent company of OptumRx, which holds a 21% portion of the market.

PBMs are also a component of a convoluted and opaque distribution system that is responsible for getting pharmaceuticals from pharmaceutical companies to the intended recipients (see Figure 1). Source material modified from that found in Sood, N., et al”Flow .’s of Money Through the Pharmaceutical Distribution System,” a white paper published by the USC Schaeffer Center for Health Policy.

Within this arrangement, corporations have the ability to keep payments and discounts amongst themselves private; yet, analyses suggest that pharmaceutical manufacturers gain the largest income from the development and production of prescription medications AND: The top pharmaceutical manufacturing conglomerates have revenue that is higher than the top PBM conglomerates.

On the Fortune 500 list, which ranks the largest firms in terms of sales, PBM giants CVS (4th), UnitedHealth Group (5th), and Cigna (13th) rank respectively 4th, 5th, and 13th. PBMs are a key income generator for their parent firms in the following ways:

• ” CVS Health’s Pharmacy Services (PBM) sector will account up 46% of the company’s $324 Billion in revenues in 2021 and will continue to play an essential role in the company’s revenue development. “
• The “driving force” behind the $22 billion increase in Cigna’s overall sales in 2019 was its subsidiary Express Scripts Holding Co., which more than quadrupled the company’s total revenues in 2019, from $14.3 billion to $38.2 billion.
• In the fourth quarter of 2019, UnitedHealth’s Optum businesses brought in a greater profit (three billion dollars) than United Healthcare insurance did (two and a half billion dollars).

HOW Payment Branch Managers (PBMs) Hurt Customers and Taxpayers 1. Pharmaceutical benefit managers (PBMs) are entitled to financial compensation from pharmaceutical companies in the form of rebates for placing specific medications on formularies. PBMs negotiate with medication makers for legal payments known as “rebates” in order to give particular pharmaceuticals preference placement on formularies.

1. This process occurs concurrently with the creation of a list of covered drugs by PBMs (e.g.
2. , Tier 1 with no co-pay, etc.).
3. Under federal law, kickbacks are typically prohibited; however, PBMs are granted a “safe harbor,” and a federal regulation that would make it unlawful for PBMs to pay rebates has been postponed.

When establishing formularies, PBMs have a conflict of interest due to the fact that they may generate more revenue for shareholders by selecting a costly prescription that comes with a bigger rebate than they can by selecting a drug that is either the most effective or the most economical for customers.

1. PBMs say that passing rebates to insurers, who may be their parent firms, would result in cheaper premiums and co-pays, but research demonstrate that this benefit does not trickle down to consumers in any way.
2. In point of fact, pharmaceutical companies pay for PBM rebates by increasing the list costs of the pharmaceuticals they sell, which results in customers having to pay a larger co-pay because they are responsible for paying a percentage of the higher list pricing.

It is anticipated that rebates contributed roughly 30 cents per dollar to the total price that customers paid for prescription medications in 2019, bringing the total to $143 billion.2. PBMs overcharge payers, especially state Medicaid programs, and underpay pharmacists because they are able to pocket the difference (referred to as the “spread”) between how much they are paid and how much they reimburse pharmacies.

Several states have discovered concerns with PBMs that are connected to their ability to maintain the “spread.” For instance, according to the findings of an audit conducted in Ohio, “CVS Caremark and UnitedHealth’s OptumRx PBMs reaped more than $223 million—and made an 8.8% profit—in one year by overcharging Medicaid managed care plans, underpaying pharmacies, and pocketing the difference.” This was found to be the case in a single year.

The state of Ohio discovered that the price difference between brand-name and generic drugs came to $5.70 per prescription, and that the state could have obtained the same services for $1.90 per prescription or less by switching to a fee-based model.

Under this model, pharmacies are reimbursed their acquisition cost in addition to a set administrative fee. The state of Ohio issued an order mandating that all managed-care plans in the state terminate their PBM spread pricing contracts for 2019.3. PBMs will “claw back” and keep any additional co-pays from customers.

When a co-pay is $10, but the price of the medicine without insurance is $7, consumers frequently are unaware that they might have paid less if they had NOT utilized their insurance. For example, when a co-pay is $10, the price of the drug without insurance is $7.

PBMs are the ones who “claw back” overpayments and keep the money even though customers should be entitled to reclaim such overpayments. According to the findings of a study conducted by researchers at the Schaeffer Center for Health Policy & Economics at the University of Southern California, consumers overpaid for their prescriptions 23 percent of the time due to claw backs by PBMs.4.

Pharmacy benefit managers (PBMs) make money off of a government program known as “Section 340B,” which is designed to assist people with low incomes. In 1992, Congress passed Section 340B of the Public Health Service Act, which mandated that pharmaceutical manufacturers offer outpatient medications to certain “covered organizations” at large discounts.

These “covered entities” included hospitals, clinics, and other medical facilities. The initial goal of the 340B program was to provide a small number of safety-net hospitals that provided medical treatment to low-income patients with the opportunity to purchase medications at significantly discounted costs.

There are now approximately 5,000 covered entities and 20,000 affiliated sites, as well as, “30,000 pharmacy locations – half of the entire U.S. pharmacy industry – now act as contract pharmacies for the hospitals and other healthcare providers that participate in the 340B program.” This explosion in the number of entities eligible for 340B discounts was brought on by modifications to federal laws, which caused the number of entities eligible for the discounts to increase dramatically.

• “more than 8% of the overall U.S.
• drug market and roughly 16% of the total rebates and discounts that manufacturers give” are accounted for by the 340B discount program’s provision of pharmaceuticals.
• This massive, convoluted, and largely unheard-of program is broken down in greater detail here, but the primary source of problems with PBMs is their practice of “discriminatory reimbursement,” in which they provide 340B entities with lower reimbursement rates than those provided to non-340B entities.

At this time, the federal 340B Act enables PBMs to gain considerable profits while also preventing them from passing money on to the people that Section 340B was designed to assist.5. PBM conglomerates own specialty, mail-order, and retail pharmacies, and they might act against the interests of customers in the following ways:

• The practice of setting low reimbursements for their rivals, which is one of the causes of the disappearance of small independent pharmacies.
• Pharmacy Steering is a practice in which PBMs “steer” customers to pharmacies, such as mail order and specialty pharmacies, with which they are affiliated. One example of this practice is the imposition of a higher copay on patients who obtain their medications from pharmacies that are not affiliated with the PBM.
• Pharmacist gag orders despite the fact that there is a federal legislation and a new rule that will go into effect in Rhode Island in 2021 that forbids PBMs from barring pharmacists from discussing cheaper options, the customer still needs to ask, and they may not be given all of their available choices.

6. PBMs have the ability to conceal earnings The following are some of the reasons why Figure 1 shows a lack of transparency:

• PBMs continue to maintain the confidentiality of the discounts and rebates they have negotiated, including with regard to a recent investigation into insulin costs conducted by a committee of the federal Senate.
• PBMs disguising revenues, e. instance. , as “rebate management fees” and “savings. “
• PBMs managing their own audits, for example, by having the authority to veto auditors, determining the frequency of audits, requiring auditors to sign “Confidentiality Agreements,” etc. PBMs controlling their own audits also have the power to veto auditors.

7. “Utilization Management” from a PBM can put patients in danger. PBMs make the argument that they will adopt techniques for “utilization management” on behalf of payers, which will benefit both payers and customers. These tactics could include things like:

• Prior authorization is a process that requires individuals to obtain clearance from a third party before they may obtain the drug that was prescribed to them by their healthcare practitioner.
• Patients who are undergoing “step therapy,” sometimes referred to as “fail-first,” “sequencing,” and “tiering,” are required to begin their treatment with less expensive drugs before being considered for approval to take their first prescribed meds.
• “”which drives patients off their existing therapies for no reason other than to save money.” Non-medical medication switching “which forces patients off their current therapies for no reason other than to save money.”
• Increasing patients’ out-of-pocket expenses, shifting patients’ therapies to higher cost categories, or removing coverage for a specific prescription are all examples of such strategies.”

Unfortunately, such utilization management can also cause harm to consumers since it forces clinicians to spend an inordinate amount of time on administrative chores, which in turn delays and discourages patient treatment and has a negative impact on clinical results.

1. Control of Pharmacy Benefit Managers in Other States Rhode Island does have certain rules and regulations pertaining to PBMs, but other states are more actively examining and regulating PBMs to provide a higher level of safety for their constituents, both consumers and taxpayers.
2. Rutledge v.
3. PCMA, which was just decided by the Supreme Court, provides support for states adopting more moves to regulate PBMs.

The following are some examples of acts taken by other states: 1. Establishing mandates for the reporting of transparent information 27 of the states that have their Medicaid programs managed by commercial insurance corporations (Managed Care Organizations – MCOs) have declared that they will have transparency reporting standards in place by the beginning of the fiscal year 2020.

1. Take, for instance: PBMs are required to report information to the state of Texas under a law that was passed in 2019.
2. This led to the discovery that “Since 2016, through a complex rebate and price concession process, the PBM industry in Texas pocketed more than $350 million in revenue, while passing a mere $16 million in savings to enrollees.” 2.

Investigating PBMs Several states have conducted investigations on PBMs, while others are in the process of doing so.

• An audit conducted by the state of Florida discovered that “prescription markups” charged by PBMs will cost the state’s Medicaid system $113.3 million in 2020 ($89.6 million in “spread charges”).
• After the state discovered that PBMs retained $123.5 million in spread each year, the Attorney General of Kentucky began an investigation into whether or not PBMs had overcharged the state of Kentucky and whether or not they had discriminated against independent pharmacies.
• An investigation conducted in Massachusetts found that the prices charged by pharmacy benefit managers (PBMs) for generic drugs were often “markedly higher” than the actual cost of the drug in both Mass Medicaid Managed Care and Commercial Plans, “contributing to higher health care spending” (for example, up to 111% more for certain drugs than in the fee-for-service state-managed Medicaid program). In addition, the investigation found that the prices charged by PBMs for brand-name drugs were often “substantially lower” than the
• After an audit revealed that pharmacy benefit managers were paid more than $1.1 billion—sometimes as much as $25 million a month—the Mississippi Auditor General is conducting an investigation into PBMs that are suspected of overcharging the state Medicaid program and the Mississippi State and School Employees’ Life and Health Insurance Plan, which covers nearly 200,000 state employees, retirees, and the families of those individuals.
• The Auditor General of Pennsylvania discovered that the amount of money that taxpayers paid to PBMs for Medicaid enrollees more than doubled between 2013 and 2017, going from $1.41 billion to $2.86 billion. As a result of this discovery, the Auditor General is urging greater transparency and more state control.

3. Excluding pharmaceutical benefit managers (PBMs) from the management of Medicaid pharmacy benefits Four states (Missouri, West Virginia, Tennessee, and Wisconsin) announced in 2019 that they routinely “carve out” pharmacy coverage from their Medicaid managed care plans, and additional states were considering doing the same thing.

• PBMs like as Express Scripts and CVS were “carved out” of West Virginia’s Medicaid managed-care program when the state switched to a fee-for-service model for the administration of the program, which resulted in the elimination of spreads and a reduction in administrative costs. It was anticipated that this would result in annual savings of $30 million, which is equivalent to around 4% of the state’s Medicaid prescription costs. In point of fact, West Virginia Medicaid was able to save $54.4 million in its first year, while pharmacies in West Virginia received $122 million in fixed dispensing fees that had previously been paid to out-of-state pharmacy benefit managers (PBMs).
• Following the completion of the state audit described above and the State Auditor’s conclusion that “it is now overwhelmingly apparent that PBMs are operating the biggest shell game in modern history, and we are all paying for it,” the state of Ohio decided to enter into a contract with a single PBM for the state’s Medicaid program.

Avoiding the use of spread pricing A restriction on spread pricing is expected to go into force in about 17 states by the beginning of 2021. (Figure 3). Arkansas: Passed a legislation that required all PBMs to pay pharmacies at a price that was either equivalent to or greater than what the pharmacy paid to acquire the medicine from a wholesaler.

• Spread pricing was prohibited in Maryland when it was discovered in a state Medicaid study that PBMs were pocketing “spread” of $72 million yearly.
• After a state audit revealed that PBM profit accounted for 31.4% ($208.4 million) of the $662.7 million paid by Ohio Medicaid MCOs for generic medications, the state of Ohio decided to end spread pricing contracts with pharmacy benefit managers (PBMs) and transition to a pass-through model.

4. Limiting the amount of rebates paid by PBMs

• Rebates and discounts offered in Ohio are expected to be returned to the state.
• PBMs were obligated to share rebates and other forms of “compensation” with customers or insurers in the state of Maine (who must in turn apply the funds to “offset the premium for covered persons”).
• The West Virginia State University of Pharmaceutical is now in charge of administering pharmacy coverage for both state employees and Medicaid participants, which resulted in a savings of $38 million in the program’s first year of operation.
• Approximately seventeen states have passed stricter regulations that require PBMs to provide information about rebates.

5. Prohibiting “claw backs” Roughly 38 states have passed legislation to outlaw PBM “claw backs.” 6. Putting an end to prejudice in the pharmaceutical industry

• Pharmacy steering is a practice that has been outlawed in the states of Georgia, Louisiana, Minnesota, and Utah thanks to the passage of laws in those states.
• PBMs are required to give greater transparency and “fair and reasonable” reimbursements in Kentucky due to a law that was passed in that state.

7. Limiting the payments allowed under Section 340B Approximately 11 states have approved legislation that makes it illegal for PBMs to reimburse 340B covered companies at a lower rate than they compensate other entities that get their normal reimbursement rate.8. Placing Restrictions on the Term “Utilization Management”

• Prior Authorization – Twelve states, including Rhode Island, have passed laws that prohibit certain drug classes or categories from being required to obtain Prior Authorization in some or all circumstances. The majority of these states, excluding Rhode Island, also apply such statutory limits to Medicaid MCOS.
• Step Therapy — Eleven states have already passed laws to prohibit step therapy, and many more states are contemplating doing the same. For example, Arkansas was the first state to approve a thorough step-therapy ban.
• Non-Medical Drug Switching Several states have either outright banned the practice or sponsored legislation that would place restrictions on it.

Possible Obstacles in the Way of Regulatory Reforms 1. CVS-Aetna-Caremark

• The pharmacy benefit management (PBM) division of CVS Caremark, a significant company headquartered in Rhode Island, is the company’s primary driver of income.
• Even while it is impossible to determine the whole degree of a corporation’s impact, such effect can still be considerable, and it also:

• To push in Rhode Island against proposed PBM changes, CVS pays lobbyists significant sums of money (for example, Pharmacy Care Management Association – PCMA, $3,962,000 in 2020).
• CVS is a financial supporter of Rhode Island government officials that have not voted to investigate or regulate middlemen, payers, and PBMs as potential causes of rising healthcare costs.
• CVS has made this threat in an effort to sway the proposed legislation in Rhode Island.
• Since 2010, CVS has been able to secure over $240 million in tax breaks from the state of Rhode Island. This is despite the fact that the company has apparently reduced its workforce in Rhode Island from approximately 12,000 to 3,000 (including receiving over $20 million in FY2016 and cutting 247 jobs without notice to the state), and despite the fact that Rhode Island taxpayers pay for at least 300 CVS employees in Rhode Island who are enrolled in Medicaid.

2. The Health and Human Services Executive Office for the State of Rhode Island (EOHHS)

• Despite the lack of evidence that privatizing Medicaid serves consumers and taxpayers better than the fee-for-service state-run Medicaid program that was previously in place, the Rhode Island Executive Office of Health and Human Services (RI EOHHS) has advocated for RI Medicaid to be “managed” by private insurance companies.
• Currently, approximately 90% of Rhode Island’s Medicaid is managed by managed care organizations (MCOs) such as Neighborhood Health Plan of Rhode Island, Tufts Health Plan, and United Healthcare Community Plan. These MCOs are paid approximately $1.7 billion annually (about 40% state funds and 60% federal funds), despite the fact that the Rhode Island Auditor General has raised concerns about inadequate state MCO oversight every year since 2009.
• There is a lack of PBM control and constraints in the RI MCO contracts, which are due to expire in April 2022. For example, they do not:

• Do not have criteria for reporting that can indicate the level of PBM distribution.
• Please do not extend the statutory limits on prior authorizations to include the PBMs who handle Medicaid managed care.

3. The Rhode Island Office of the Commissioner of Health Insurance

• The “Office of Health Insurance Commissioner” (OHIC) in the state of Rhode Island is the only one of its kind in the whole country. The OHIC’s number one priority is to “protect the solvency of health insurers.” See RIGL § 42-14.5-2 .
• Although the OHIC may also have the goal of protecting customers, it seems to place a higher priority on the economic interests of health insurers. For instance, increasing health insurance premiums during the COVID-19 epidemic is an example of this.
• The OHIC is aware that the expenses of prescription drugs are substantial contributors to the overall cost of healthcare
• nevertheless, its studies do not take into account the role that insurers and PBMs play in the ever-increasing cost of healthcare.

4. Project on the Changing Costs of Rhode Island Healthcare

• The RI Health Care Cost Trends Project (“Cost Trends Project”) is the most recent major research effort to study the costs of healthcare in Rhode Island. This “private-public partnership” was funded by a $550,000 grant from the Peterson Center on Healthcare (PCH), which was founded by Pete Peterson, a “power from Wall Street to Washington,” who championed the theory that “entitlement programs” like Medicare, Medicaid, and Social Security would wreck the economy of the United States. The Peterson Center on Healthcare Analyses that are sponsored by PCH do not investigate the possibility that intermediaries like as insurers and PBMs might be cost drivers.
• “identify cost and utilization drivers,” “create an annual health care cost growth target,” and “inform system performance improvements” are the objectives of the Cost Trends Project.
• After spending its initial grant of $550,000, the Cost Trends Project produced analyses that ignored how insurers and PBMs affect health care costs and were unable to establish an accurate “annual health care cost growth target.” These analyses were produced despite the fact that the Cost Trends Project was able to establish an accurate “annual health care cost growth target.”
• A significant portion of the steering group and personnel for the Cost Trends Project are as follows:

• Having connections to middlemen working for insurance companies or PBMs who now or have held top roles, or
• work for groups that receive a significant portion of their financing from insurers or PBMs,
• have a history of creating healthcare cost studies that fail to evaluate intermediaries and instead focus on restricting providers, despite data showing that such policies are counterproductive
• this is despite the fact that healthcare cost analyses can and should analyze middlemen.

What Rhode Island Ought to Do Officials in Rhode Island’s legislative and executive branches should take a more active approach to regulating PBMs, as other states have already done, including the following states:

1. PBMs should be required to publish information that will lead to efficient and effective continuous governmental supervision and control of PBMs.
2. Conduct the required investigations and legal measures, both civil and criminal.
3. Remove pharmacy benefit managers from the contracts for Medicaid Managed Care Organizations (MCOs) that are up for renewal in April 2022.
4. Restriction should be placed on the unjustifiable profits earned by insurers and pharmacy benefit managers (PBMs), such as those that result from spread pricing, “claw backs,” “pharmacy steering,” discriminatory reimbursements, manufacturer rebates, and Section 340B transactions.
5. Put a stop to damaging usage management tactics including Prior Authorization, Step Therapy, and Non-medical Drug Switching, which are used by insurers and PBMs.
6. Create an objective study panel to investigate ALL of the possible factors that contribute to the cost of healthcare, including private middleman insurers and PBMs.

WHAT YOU CAN DO By signing this petition, you will be asking Rhode Island’s state lawmakers, the OHIC, and the EOHHS to change the supervision and control that is exercised over PBMs. This article also comes with a fully annotated version, which can be found here.

What PBM does CVS own?

Following mounting criticism of the middlemen and their involvement in contributing to an increase in the cost of prescription pharmaceuticals in the United States, the Federal Trade Commission has decided to begin an inquiry into the sector of pharmacy benefit management.

On Tuesday, the regulators announced that they will be requiring the six largest PBMs in the United States — CVS Caremark, Express Scripts, OptumRx, Humana, Prime Therapeutics, and MedImpact Healthcare Systems — to turn over extensive information and records regarding their business practices, dating back five years.

The information and records will cover a period of time beginning in 2013. According to the Federal Trade Commission (FTC), the investigation will investigate a variety of topics, including the fees and clawbacks that pharmacy benefit managers (PBMs) charge pharmacies that are not affiliated with them; methods to steer patients toward PBM-owned pharmacies; the prevalence of administrative restrictions such as prior authorizations; the impact of rebates and fees from drug manufacturers on the design of formularies; and the costs of prescription drugs for both payers and patients.

The revelation was met with jubilation by pharmacy advocacy organizations since it overturned a decision made earlier this year by FTC commissioners not to probe the pricing and contractual practices of PBMs. An OptumRx spokesman, after being contacted with requests for comment, referred Healthcare Dive to the PBM trade group so that they could provide a response.

In an interview with Healthcare Dive, a spokesman for CVS said, “We look forward to working collaboratively with the Federal Trade Commission.” Express Scripts did not answer. In the past, pharmacy benefit managers (PBMs), which are companies that establish medication formularies, negotiate rebates and fees with drugmakers, and reimburse pharmacists for prescriptions, have asserted that they save money by negotiating down the exorbitant pricing of pharmaceuticals.

1. However, in recent times, the business model utilized by PBMs has been subjected to significant criticism from various provider and pharmacy organizations, as well as government regulators and lawmakers.
2. Critics are sounding the alarm over the middlemen’s role in rising health spending, complicated and often opaque contracts, controversial business practices, and vertical consolidation, which has resulted in the largest PBMs being integrated with the largest health insurance companies.

In addition, critics are concerned about the middlemen’s role in vertical consolidation, which has resulted in the largest PBMs being integrated with the largest health insurance companies. Nearly 80% of the market for prescription drugs is controlled by the three largest pharmacy benefit managers (PBMs), which are CVS Caremark, Express Scripts, and OptumRx.

1. These PBMs are owned by CVS (which also owns the payer Aetna), Cigna, and UnitedHealth (which operates the payer UnitedHealthcare), respectively.
2. In addition, Congress has taken note: This past week, two senators from different political parties introduced legislation that, among other things, would prohibit pharmacy benefit managers (PBMs) from engaging in business practices such as clawing back fees or overcharging pharmacies, and would require PBMs to report more financial data.

In response to the investigation, the Chairwoman of the Federal Trade Commission, Lina Khan, stated in a statement that “while many people have never heard of pharmacy benefit managers, these powerful middlemen have significant influence over the U.S.

prescription medication system.” “The findings of this study will provide light on the business practices of these organizations and the impact those activities have had on pharmacies, payers, physicians, and patients.” The Federal Trade Commission (FTC) published a request for information about pharmaceutical benefit managers back in February, and to this day, they have received more than 24,000 responses from the general public.

After a vote in which FTC commissioners were split 2-2 on a proposal to initiate an investigation into PBMs, a request for information was issued after the vote. Khan had stated that she would want another vote on the matter at the time it occurred. On Tuesday, the commissioners announced that they had decided 5-0 to begin the investigation.

• Khan and Commissioner Rebecca Slaughter both voted in favor of the motion, while Alvaro Bedoya, who was sworn in as a commissioner in May, also voted in favor of the motion.
• Commissioners Noah Phillips and Christine Wilson, who had previously voted against the investigation, voted in favour of it on Tuesday.

They noted in a joint statement that the inquiry proposed on Tuesday is more targeted than the one that was presented in February. The Federal Trade Commission (FTC) has issued an order requiring the six pharmacy benefit managers (PBMs) to provide it with a wide range of information, including how PBMs determine payments to other companies, how they limit participation in pharmacy networks, the formularies and prescription drug lists for the plans that they administer, instances in which a branded drug is placed on a more favorable formulary tier than a generic or biosimilar equivalent, annual pharmacy reimbursement data, and every rebate contract.

1. The corporations will have a period of ninety days to reply to the order after they have received it.
2. The chief executive officer of the National Community Pharmacists Association, Douglas Hoey, said in a statement that pharmacy benefit managers (PBMs) had “escaped meaningful examination for far too long,” but that this report will “bring their dirty laundry out into the light.” “We’re grateful to Chair Khan and the commissioners for considering these concerns and approving this study,” said Hoey, whose group represents about 21,000 pharmacies across the United States.

“We hope this will result in meaningful reforms to merger and acquisition reviews and, of course, to the insurer-PBMs themselves,” Hoey said in conclusion. “We’re grateful to Chair Khan and the commissioners for considering these concerns and approving this study.”

What PBM does CVS own?

Following mounting criticism of the middlemen and their involvement in contributing to an increase in the cost of prescription pharmaceuticals in the United States, the Federal Trade Commission has decided to begin an inquiry into the sector of pharmacy benefit management.

On Tuesday, the regulators announced that they will be requiring the six largest PBMs in the United States — CVS Caremark, Express Scripts, OptumRx, Humana, Prime Therapeutics, and MedImpact Healthcare Systems — to turn over extensive information and records regarding their business practices, dating back five years.

The information and records will cover a period of time beginning in 2013. According to the Federal Trade Commission (FTC), the investigation will investigate a variety of topics, including the fees and clawbacks that pharmacy benefit managers (PBMs) charge pharmacies that are not affiliated with them; methods to steer patients toward PBM-owned pharmacies; the prevalence of administrative restrictions such as prior authorizations; the impact of rebates and fees from drug manufacturers on the design of formularies; and the costs of prescription drugs for both payers and patients.

The revelation was met with jubilation by pharmacy advocacy organizations since it overturned a decision made earlier this year by FTC commissioners not to probe the pricing and contractual practices of PBMs. An OptumRx spokesman, after being contacted with requests for comment, referred Healthcare Dive to the PBM trade group so that they could provide a response.

In an interview with Healthcare Dive, a spokesman for CVS said, “We look forward to working collaboratively with the Federal Trade Commission.” Express Scripts did not answer. In the past, pharmacy benefit managers (PBMs), which are companies that establish medication formularies, negotiate rebates and fees with drugmakers, and reimburse pharmacists for prescriptions, have asserted that they save money by negotiating down the exorbitant pricing of pharmaceuticals.

1. However, in recent times, the business model utilized by PBMs has been subjected to significant criticism from various provider and pharmacy organizations, as well as government regulators and lawmakers.
2. Critics are sounding the alarm over the middlemen’s role in rising health spending, complicated and often opaque contracts, controversial business practices, and vertical consolidation, which has resulted in the largest PBMs being integrated with the largest health insurance companies.

In addition, critics are concerned about the middlemen’s role in vertical consolidation, which has resulted in the largest PBMs being integrated with the largest health insurance companies. Nearly 80% of the market for prescription drugs is controlled by the three largest pharmacy benefit managers (PBMs), which are CVS Caremark, Express Scripts, and OptumRx.

• These PBMs are owned by CVS (which also owns the payer Aetna), Cigna, and UnitedHealth (which operates the payer UnitedHealthcare), respectively.
• In addition, Congress has taken note: This past week, two senators from different political parties introduced legislation that, among other things, would prohibit pharmacy benefit managers (PBMs) from engaging in business practices such as clawing back fees or overcharging pharmacies, and would require PBMs to report more financial data.

In response to the investigation, the Chairwoman of the Federal Trade Commission, Lina Khan, stated in a statement that “while many people have never heard of pharmacy benefit managers, these powerful middlemen have significant influence over the U.S.

prescription medication system.” “The findings of this study will provide light on the business practices of these organizations and the impact those activities have had on pharmacies, payers, physicians, and patients.” The Federal Trade Commission (FTC) published a request for information about pharmaceutical benefit managers back in February, and to this day, they have received more than 24,000 responses from the general public.

After a vote in which FTC commissioners were split 2-2 on a proposal to initiate an investigation into PBMs, a request for information was issued after the vote. Khan had stated that she would want another vote on the matter at the time it occurred. On Tuesday, the commissioners announced that they had decided 5-0 to begin the investigation.

• Khan and Commissioner Rebecca Slaughter both voted in favor of the motion, while Alvaro Bedoya, who was sworn in as a commissioner in May, also voted in favor of the motion.
• Commissioners Noah Phillips and Christine Wilson, who had previously voted against the investigation, voted in favour of it on Tuesday.

They noted in a joint statement that the inquiry proposed on Tuesday is more targeted than the one that was presented in February. The Federal Trade Commission (FTC) has issued an order requiring the six pharmacy benefit managers (PBMs) to provide it with a wide range of information, including how PBMs determine payments to other companies, how they limit participation in pharmacy networks, the formularies and prescription drug lists for the plans that they administer, instances in which a branded drug is placed on a more favorable formulary tier than a generic or biosimilar equivalent, annual pharmacy reimbursement data, and every rebate contract.

• The corporations will have a period of ninety days to reply to the order after they have received it.
• The chief executive officer of the National Community Pharmacists Association, Douglas Hoey, said in a statement that pharmacy benefit managers (PBMs) had “escaped meaningful examination for far too long,” but that this report will “bring their dirty laundry out into the light.” “We’re grateful to Chair Khan and the commissioners for considering these concerns and approving this study,” said Hoey, whose group represents about 21,000 pharmacies across the United States.

“We hope this will result in meaningful reforms to merger and acquisition reviews and, of course, to the insurer-PBMs themselves,” Hoey said in conclusion. “We’re grateful to Chair Khan and the commissioners for considering these concerns and approving this study.”

Is Express Scripts the largest PBM?

PBMs are attempting to adapt to a number of market changes that are influencing their business, such as the growing trend of speciality drugs and the increase in cell/gene treatments and biosimilars. The key finding is that this is happening. – There are three Important Players Maintain an 80% market share of the whole PBM market based on the total adjusted claims.

Express Scripts came in second with 25% of the market share for PBMs in 2021, followed by CVS Caremark with 34% of the total adjusted claims. OptumRx rounded out the top three with 21%. These three PBMs collectively hold around 80 percent of the overall market share for PBMs. The Specialty Drug Spend/Pipeline has been Identified by the Panelists as Being the Most Disruptive Trend in 2022.

When respondents were asked to rank the market trends and dynamics that had the greatest potential to change the pharmacy benefit manager business in 2022, they ranked the Specialty Drug Spend/Pipeline as the most disruptive trend. This was followed by the Cell and Gene Therapy Cost and Advancement, as well as the Biosimilar Adoption and Pipeline.

• The entire research contains a comprehensive summary of the market developments that pharmacy benefit management executives anticipate will be the most disruptive in 2022.
• Group Purchasing Organizations that are Owned by PBMs (GPOs).
• Zinc, Ascent, and Emisar are examples of some of the independent GPO organizations that have been established by the top three PBMs.

These GPO entities are responsible for handling contractual and manufacturer negotiations. Approximately 45% of the HIRC’s panel reports that they operate their own independent GPO company, and an additional 14% of respondents indicate that they have plans to establish a GPO.

1. Respondents who work for GPOs indicate that they have a success rate of around 68% when it comes to negotiating better contracts and cheaper prices.
2. Methodology of the Research and Reports That Are Available During the months of December 2021 and January 2022, the HIRC conducted a survey of 22 important decision-makers working in pharmacy benefit management for very large, mid-size, and small/upcoming PBMs.

The information needed was gathered through the use of follow-up telephone interviews and online questionnaires. Pharmacy Benefit Managers: Market Landscape and Strategic Imperatives is a full research that is now accessible to HIRC’s Managed Markets subscribers at www.hirc.com.

Who is Walmart’s PBM?

Walmart stated on Tuesday, in a separate press release, that it would be forming a collaboration with Capital Rx, a startup pharmacy benefit manager (PBM) that offers information to health insurers on the costs of prescription drugs.

Does Walgreens have its own PBM?

Officially launching its new specialty pharmacy and prescription mail services firm, Walgreens Boots Alliance has done so in partnership with pharmacy benefit manager Prime Therapeutics. Prime Therapeutics is a PBM that is controlled by 14 different Blue Cross and Blue Shield plans.