PBMs generate according Credit Suisse about $90 billion in revenue – all from drug companies paying them rebates -- because they have been given the near monopoly power to determine who gets what medicines and how much they will pay for them. PBMs demand rebates in exchange for giving drug companies preferred position on formularies. (They are also rumored to demand a discount off of the already discounted price Rx companies give before rebates.)
On top of that, PBMs then – in partnership with many health insurers – take the drugs that they have gotten at a discount and put them in the highest cost sharing tier for the sickest patients, those with cancer, autoimmune disorders, HIV, hepatitis C and chronic pain. And at that point, drug companies – who have already pledged rebates of up to 40 percent of something near the agreed upon sale price – pick up a lot of the out pocket cost that the PBMs have dumped on patients.
It gets even better. To top it off, the PBMs, led by Express Scripts, have been portraying themselves as the thin blue line between profiteering specialty pharmacies and the same consumers they are screwing to fatten their margins.
The Valeant controversy prompted journalists to wonder if other specialty pharmacies were owned and operated by drug firms whose products they distributed.
Indeed, in recent weeks Express Scripts (ESI) has capitalized on the journalistic frenzy feeding over the relationship between Valeant and Philidor to shove aside many specialty pharmacies, replacing these entities with ESI’s own retail pharmacies and self-serving drug formularies without notice.
That was enough cover to permit Express Scripts and other PBMs consolidate its already substantial control over prescription drug sales and increase profit margins by tearing up contracts with any specialty pharmacy that distributed unique drugs to specific groups of patients.
The most recent example of this Putin-like business practice: Express Scripts sudden decision to terminate a relationship with a specialty pharmacy company called Linden. Because Linden Care manages the pain meds of many patients using drugs made by Horizon Pharma, Express Scripts smeared Linden as another Philidor.
And if anyone had taken the time to look at what Linden did, it would discover (it took me all of 10 seconds) that Linden is not a ‘captive pharmacy.’ Horizon does not own Linden’s business. Moreover, specialty pharmacies like Linden that are focused on pain management have state-of-the-art security systems, sophisticated software to identify and weed out “doctor-shopping” patients and corrupt prescription factories. They work closely with the Drug Enforcement Agency and local law enforcement issues to prevent fraud and abuse. Most importantly, they ensure that patients suffering from chronic and severe pain can access the medicines they need. Which is why Horizon and many other companies with pain management products use such niche pharmacies.
In contrast ESI just terminated the contract, forcing patients to find – without notice – a new retail pharmacy under ESI’s control. As Adam Fein recently asked: PBMs routinely monitor their networks, why did it take a highly publicized pharmacy meltdown before PBMs finally cracked down?
Maybe it’s because ESI wanted the business. Maybe it was because it also has its own specialty pharmacy Accredo that has a larger share of Horizon’s business than does Linden.
CMPI has dealt extensively with the safe distribution and use of pain meds. Linden is the gold standard for doing so. Pain management is a highly specialized medical field, with doctors, pharmaceutical companies, and pharmacies working together to provide vital care to patients in severe chronic pain while ensuring adherence to the strictest standards of compliance and regulations in the industry.
Linden is asking a federal court to put the termination on hold so, at the very least, it can negotiate a new contract with ESI and assure that in the interim patients are not endangered. It is within the jurisdiction of the court to ask: How many patients will be deprived of – or forced to change their medicines -- because of this shift?