1. What are Pharmacy Benefit Managers?
A Primer on Pharmacy’s Unregulated Middlemen
Hugh Chancy, RPh
Chancy Drugs

2. PHIL MYPOCKETS VIDEO

3. What are Pharmacy Benefit Managers?
Pharmacy Benefits Management (PBM)
Organization that manages pharmaceutical benefits
Managed Care Organizations
Employers
Government Programs

4. How Pharmacy Benefit Managers Work
PBMs contract with pharmaceutical manufacturers to obtain favorable pricing

5. How Pharmacy Benefit Managers Work
Employers/insurers sign 1-3 year contracts with PBMs to “manage” the pharmacy benefit provided to their members and employees

6. How Pharmacy Benefit Managers Work
PBMs contract with a pharmacy network – usually 60,000+ pharmacies – sets pharmacy reimbursements rates (how much a pharmacy will be paid for a dispensed drug)
PBM Pharmacy Networks are comprised of various types of pharmacies
Independent Small Business Pharmacies
Regional Chains
National Chains
Big Box and Grocery Stores

7. How Pharmacy Benefit Managers Work
The “Crown Jewel” of PBMs is their mail order operations
Automated pill dispensing factory
Focus: 90-day supplies of maintenance medications used for chronic diseases
“Competes” with retail pharmacies for maintenance medications while setting the retail selling price of maintenance medications
Various pricing schemes that drive high PBM profits through the creation of false economies

8. How PBM Claims Processing Works
Process pharmacy claims - similarly to how VISA and MasterCard process retail purchases
Despite “touching” billions of other people’s dollars annually, PBM business practices are unregulated, and present many serious conflicts of interest
PBM conflicts of interest have resulted in a long history of litigation, settlements and judgments

9. How PBM Claims Processing Works
Pharmacy Benefit Managers
Pharmacy Network
Employers – Small & Large
Insurance Companies
Pharmacist fills prescription(s) and electronically submits claim to the PBM
PBM verifies patient eligibility and sends back to pharmacy payment information
Patient receives prescription and typically pays co-pay
PBM bills employer/insurer for prescription(s) filled for their beneficiary
PBM has placed itself in the middle of all communication between the employer/insurer and the pharmacy provider

10. Questionable PBM Practices
Retail Pharmacy “Spreads”
Charging the employer/insurer an amount greater than the pharmacy was paid
Ex: Employer gets charged $28.50 for a prescription, but the pharmacy was only paid $ The PBM artificially inflated the cost of the prescription by $16.20.
Rebates/Kickbacks from Drug Manufacturers
Accepting money from drug manufacturers in return for placing brand drugs in the “preferred” formulary tier; receives billions of dollars in “rebates” from manufacturers for increasing market share.
Mail Order Self-dealing
Creates “false economies” to drive patients to use mail order pharmacies, which are wholly-owned subsidiaries of the PBM, for maintenance and specialty medications.
For Profit audits of pharmacies
Non program-integrity audits; audits that look for “I’s not being dotted, or T’s crossed.” Money is taken away from pharmacy and kept by the PBM, not returned to the employer/insurer

11. From the Headlines… Lawsuit Claims Caremark Resold Returned Drugs
CVS Caremark Corp. to Pay $36.7 Million to U.S., 23 States, & D.C. to Settle Medicaid Prescription Drug Fraud Allegations
Lawsuit Claims Caremark Resold Returned Drugs
Medco to Pay U.S. $155 Million to Settle False Claims Act Cases

12. PBM Mail Order Captive Patients
PBMs Mandate that Patients Use Mail Order
Patients Are Forced Into Mail Order and Can’t Get Out, Patients Must Stay & Pay
Poor Service
Poor Care
Need Local Care
Patient Counseling Provided Via Number

13. PBM Practices Skyrocket Consumer Costs
PBMs Subsidizes Use of Expensive Brands
PBM Add “Mark-ups” to Patient Pharmacy Claims
PBMs Misclassify Generics as Brands to Increase Profits
PBM Keep Rebates From Drug Companies That Are Owed To Health Plans
Mail Order Waste – Out Dated Prescriptions Keep Coming Even When Doctors Write Replacement Prescriptions

14. Recommended Solutions
Use a transparent PBM
Beware of PBMs that offer transparent and non-transparent models
Insist on a “Generics First” savings strategy
Demand that PBMs offer a “dollar-for-dollar” guarantee on any savings claims – especially on savings related to mail utilization
Use a benefits consultant with experience in negotiating transparent PBM contracts.
Ask your local pharmacist which PBMs treat them fairly.
Call your state or national pharmacist association for assistance in asking the PBM the right questions.

15. EXCELLENT SOURCE FOR FURTHER INFORMATION
WHORUNSMYDRUGPLAN.COM
EXCELLENT SOURCE FOR FURTHER INFORMATION