Imagine playing a game of blackjack at a casino where the rules are set by the house. Fair enough. Their house. But what if the player doesn’t get to know their rules? Somebody’s getting gamed.
A scenario of that analogy is being played out in the U.S. health insurance system, and Blount County is a prime example. When dealing prescriptions, pharmacy benefit managers (PBMs) hold the cards.
Simply put, by flexing their fiscal power, PBMs are able to put “the squeeze” on pharmacies that depend on these mammoth companies to dispense America’s prescription dollars. They do it under the cover of secret profit margins that enable “the spread” — the markup between what they reimburse pharmacies for a drug and what they charge clients’ health plans.
Lacking serious oversight or regulation, PBMs have conducted unfettered business practices using nondisclosure agreements, blind rates and Rube Goldberg-like financial contraptions.
Should Blount Countians care? Not unless they care about having local independent pharmacies, the health of Blount County employees and families, or their own property taxes.
Let’s divide up the sides. On one team we have the top three PBMs — Express Scripts, CVS Caremark and OptumRX of UnitedHealth Group. They control 78 percent of the prescription drug market, collecting $200 billion to cover 290 million enrollees.
On the local team are Blount Discount Pharmacy, City Drug and Lowe’s Drug, independent pharmacies in Blount County. All three pharmacies say they’ve lost money doing business with the county’s PBM.
Three years ago, Blount County’s self-insured health system was hemorrhaging. More than $1 million, one-fifth of the fund, had evaporated in just 12 months. With the fund depleting, the county hired a broker, Cole Harris, of CBIZ Inc., who selected CVS Caremark among competing bids to be the county’s PBM.
With the savings guaranteed to the county by the PBM combined with increases to premiums and deductibles for employees, the county’s plan avoided collapse.
By the middle of 2016, the county’s health fund had dwindled to $736,416, a fraction of the $6 million it totaled three years earlier. The fund is in recovery, but at what cost?
Blount County is aware of the dilemma. At a called meeting of the County Commission during the summer, a Blount Discount representative informed county officials and state Reps. Bob Ramsey and Jerome Moon that the pharmacy lost $150,000 in a 12-month period from 2017 to 2018, when it filled 13,787 prescriptions for the county government’s health plan.
Blount County Mayor Ed Mitchell knows the pharmacies have issues with CVS Caremark’s practices. As to fully understanding the mechanics of PBMs, the mayor can stand in line with health insurance experts who decry the complexities of the market but can’t decipher it without being able to follow the money.
Harris says CVS Caremark saves the county $1 million per year. The independent pharmacies say they expect to be reimbursed by the PBM for the cost of the county’s prescription refills, but the remuneration often falls short.
What happens if independent pharmacies go under? There are other options, often facing each other in city after city. On one corner there’s a CVS pharmacy; on the other a Walgreens.
This item appeared Saturday in The Street, a financial news website: “Antitrust concerns may keep CVS from acquiring a large number of the 500 to 1,000 stores that Walgreens and Rite Aid expect to close to gain approval from the Federal Trade Commission for their planned merger.”
Ever heard of a stacked deck?