Lack of Transparency and Higher Costs

Mail Order

PBMs entice plan sponsors to encourage beneficiaries to utilize mail order pharmacies, often owned by the PBM, for certain medications by promising savings through the mail order option's "economies of scale." While the theory and promises of savings may seem alluring, they don't always materialize which can end up costing the patient and plan sponsor.

For example, in terms of lower-cost generic medications, independent community pharmacies dispense generics at a greater rate than their mail order counterparts. According to the 2016 NCPA Digest Sponsored by Cardinal Health, independent pharmacies had an 82% generic dispense rate vs. 78.8% through Express Scripts mail order, according to the company's 10k filing with the SEC.

Additionally, a 2013 study by Norman V. Carroll, Ph.D., a Professor at Virginia Commonwealth University, found that the total cost for 90 day prescriptions filled at retail pharmacies were lower than those filled by mail order pharmacies.

PBMs have also faced conflict of interest questions with their mail order pharmacies when it comes to "specialty" medications, which tend to be the most costly. A New York Times article noted that "many patients are limited to one specialty pharmacy—often one owned by their insurer or pharmacy benefit manager and requiring delivery of drugs by mail." Leaving dissatisfied patients with few alternatives. This same article questioned this practice as a potential conflict of interest "Pharmacy benefit managers, or P.B.M.s, are supposed to help health plans control drug costs. But will they have the zeal to do that if they are making money dispensing these expensive medicines?"

In addition to medications potentially costing less at an independent pharmacy, independent pharmacies also drive savings associated with adherence, or the proper use of medication. PBMs measure mail order adherence on whether a prescription was shipped. However, as former Surgeon General C. Everett Koop noted, medications don't work in those who don't take them. A 2013 report by public opinion firm Langer Research Associates, entitled "Medication Adherence in America: a National Report Card" found the leading indicator of adherence was the patient's personal relationship with the pharmacist or pharmacy staff. Such a relationship is more prevalent in independent community pharmacies.

Mail order also contributes to medication waste that creates unnecessary costs for patients and plan sponsors through "auto ship" of medications even if a patient no longer requires them. A 2013 report by the Taxpayers Protection Alliance documented several instances of medication waste, and noted in the Medicare program that "...CMS has received complaints that beneficiaries have had medications delivered that had been previously discontinued or were otherwise unwanted and unnecessary at the time of delivery."

NCPA's "Waste Not, Want Not" compilation has documented additional examples of mail order waste, including tax payer funded programs.

The continued incentivizing of mail order adds additional costs for patients, plan sponsors, government payers and ultimately taxpayers.

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