PBM Corporation Copay Clawbacks Exposed

by John Norton | Jul 14, 2016

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The phrase "being caught with your hand in the cookie jar" comes to mind when watching a series of stories by New Orleans WVUE-TV's investigative reporter Lee Zurik. They explain copay clawbacks—an under-the-radar tactic employed by some pharmacy benefit manager (PBM) corporations to extract more money from patients—in a recent three-part series (part 1, part 2, part 3). Now, that body of reporting is further advanced by a blockbuster article by Kaiser Health News reporter Julie Appleby called "Filling A Prescription? You Might Be Better Off Paying Cash."

She begins by summarizing this unfortunate phenomenon:

Some consumers who use health insurance copays to buy prescription drugs are paying far more than they should be and would be better off paying with cash, especially for generics.

The added cost runs as high as $30 or more per prescription, say pharmacists, and the money is largely being pocketed by middlemen who collect the added profit from local pharmacies.

Cash prices started to dip below copays a decade ago when several big box stores started offering dozens of generics for as little as $4 per prescription. But as copays have risen and high-deductible insurance plans become more common, more consumers are now affected.

Additional evidence and expertise about copay clawbacks is provided by the National Community Pharmacists Association (NCPA), which had members recounting their frustrating experiences in a survey:

None of the pharmacists would talk on the record for fear of being kicked out of the PBM networks, so their responses could not be independently verified.

One told surveyors that a major PBM required the pharmacy to collect a $35 copay for a generic allergy spray, then took $30 back from the pharmacy. Another said a PBM charged a $15 copay for insomnia drug Zolpidem, then took back $13.05. Patients were charged $30 above the cash price for a generic cholesterol medication at another pharmacy.

In effect, the customer has paid more for the drug than the PBM ultimately pays even though "they assume what they are paying is the cost of the drug," said Susan Pilch, vice president for policy and regulatory affairs with the pharmacists' group.

Amazingly, in response Mark Merritt, CEO for the Pharmaceutical Care Management Association (PCMA), which represents PBM corporations, claimed patients should simply bypass their insurance and pay the cash price for the prescription. But NCPA explains why that is not nearly as easy as he suggests:

While agreeing that in some cases consumers could get their drugs for less if they paid cash, Pilch said pharmacists are specifically barred from discussing the cash price under terms set by contracts between them and the PBMs. Its June survey of 650 pharmacists found that more than 38 percent said they were unable to tell patients about cheaper cash prices 10 to 50 times in the previous month.

"We are required to run it through insurance and we do not have the option of advising the patient regarding matters of the terms of their plan or their options, or we run the risk of being cut from the network," she said.

Thanks to intrepid reporting from Julie Appleby, and previously from Lee Zurik, some PBM corporations are now having to explain why they appear to be treating patients' wallets like a forbidden jar of cookies.