Health insurance middlemen use formulary design, prescription drug exclusions and utilization management to maximize profits at patients' expense


WASHINGTON, July 26, 2023 - The pharmacy benefit managers who handle health plans' prescription drug coverage are undermining patients' access to critical medication rather than saving those patients money, explains Madelaine Feldman, MD, FACR, in a new paper from the nonprofit Alliance for Patient Access. The paper outlines pharmacy benefits managers' intended role and explains how their approach to developing drug formularies can drive up the list price of drugs, increase patients' out-of-pocket costs and put some prescription medications completely out of patients' reach.

"Pharmacy benefit managers control which drugs patients can take, when they can take them and how much they will pay for them," Dr. Feldman explains in the paper. "Despite their tremendous influence, many pharmacy benefit managers lack accountability, harbor conflicts of interest or fall short of their fiduciary responsibility – all at the expense of patients and patient health."

About Pharmacy Benefit Managers

Pharmacy benefit managers negotiate drug prices with manufacturers and manage prescription drug claims on behalf of health plans. They also control a plan's formulary of approved drugs, including which drugs are preferred or non-preferred and what portion of a drug's cost patients must cover out of pocket. The middlemen often favor drugs that come with big manufacturer rebates, money that does not necessarily flow back to the patient.

The approach presents a perverse incentive for companies to raise the list prices of drugs rather than lowering them. Patients who pay coinsurance, a percentage of their medication's list price, suffer in the form of higher out-of-pocket expenses.

"The rebate system actually pits PBMs' financial interests against patients' financial security and medication access," Dr. Feldman says. "PBMs benefit from a higher list price, because it results in a higher rebate payment for them. But patients benefit from a lower list price, because they then pay less out of pocket and have a better chance of being able to afford their medication."

Then, through utilization management tactics like prior authorization, step therapy and non-medical switching, pharmacy benefit managers can push patients toward medications that are most profitable rather than the medication that may be most appropriate for the individual patient.

READ THE PAPER

About Madelaine Feldman, MD, FACR

Madelaine Feldman, MD, FACR, is a rheumatology specialist with more than 30 years of experience. She is a member of the Alliance for Patient Access.

About the Alliance for Patient Access

The Alliance for Patient Access is a network of policy-minded health care providers who advocate for patient-centered care.

SOURCE Alliance for Patient Access