Another Sneaky PBM Practice Needs to End
When the nation’s largest pharmacy benefit manager (PBM), Express-Scripts, and the insurance giant Anthem, Inc. sued each other last year over how much each company made in profits, the curtain was raised on the oversized role PBMs play in determining what consumers pay for their prescription drugs.
Hired to administer insurers’ prescription drugs plans, PBMs negotiate lower drug prices with pharmaceutical manufacturers and lower reimbursement rates with pharmacies, ostensibly to save money for employers and consumers. However, because PBMs operate without transparency, there is no way to know how much of the savings from lower prices are passed along to consumers. This is why many of the largest corporations formed the Health Transformation Alliance to overhaul the way PBMs are paid and 28 states passed laws regulating some aspects of PBM operations. Additionally, Senator Ron Wyden (D-OR) recently introduced the “Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act” to require PBMs to disclose the amount and proportion of the rebates from drug manufacturers that are passed on to health plans.
Yet, even as consumers celebrate these victories, it is time to take a stand against another PBM practice: Nonmedical switching. Targeting Americans with difficult-to-treat conditions, like rheumatoid arthritis and irritable bowel syndrome, this tactic forces patients who are well managed on a therapy to take a less costly and possibly less effective drug for nonmedical reasons. PBMs accomplish this by dropping the medication from the formulary or increasing the drug’s cost-sharing requirements and then notifying patients they may need to switch to a less expensive treatment to avoid a large increase in out-of-pocket costs—typically after the plan year has begun.
Let’s be clear: no one benefits from nonmedical switching except insurers and the PBMs. This practice takes medical decision-making out of the hands of doctors and patients. It can also harm patients, both through exposure to less effective therapies, cause negative side effects, or induce the recurrence of symptoms. Moreover, nonmedical switching does not produce savings for the health system. Physicians, pharmacists, and health care administrators report that nonmedical switching increases administrative time and produces poorer disease outcomes, resulting in increased emergency room visits, hospitalizations, physician care and lab tests – which also drive up health costs.
There are many examples of harmful medical switching but one of the most egregious involves the decision by CVS/Caremark to remove a long-acting basal insulin product from its formulary and force potentially thousands of diabetes patients to switch to a different therapy. In taking this action, the PBM ignored a Food and Drug Administration warning that switching insulin “should always be done in consultation with a physician and requires close medical supervision, and if possible, close monitoring of blood glucose.” Further, the PBM overlooked medical studies finding significant differences in clinical outcomes among long-acting basal insulins and clinical practice guidelines calling for individualized treatment based on such factors as the patient’s age, life expectancy, glycemic control history, and diabetes duration.
The good news for CVS/Caremark’s 80,000 plan members is nonmedical switching may violate consumer protection laws. This is especially true when patients sign up for a health plan that covers their drugs and then learn of formulary changes that result in having to change medications. In fact, an increasing number of consumers have successfully sued insurers over this bait-and-switch tactic and a number of states are considering legislation to protect patients from nonmedical switching.
Yet, more must be done to end this harmful practice. There is an urgent need for policies that will limit insurers’ ability to force nonmedical switching, ensure full transparency of covered medications in the plan’s formulary, and allow patients who are medically stable on a drug to continue treatment unless there is a medical reason to change the medication. It is time for Congress and the states to take a stand.
Stacey L. Worthy is the Executive Director of the Aimed Alliance and a healthcare policy expert.