Drug Money Wars, Part One
Learn about a $300 Billion-a-year American Parasite called the Pharmacy Benefits Managers racket. Ike McCorkle, USMC, Retired, and 2022 Candidate for Colorado's U.S. 4th House district, and newcomer Isaiah Sandoval join Rational Politics' Nigel Aves, to discuss how the U.S. got into this expensive mess, and we need to get out.
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Pharmacy Benefits Managers (PBMs) are companies that administer prescription drug benefits on behalf of health insurance plans, self-insured employers, and other organizations. They play a crucial role in the pharmaceutical supply chain and aim to optimize the prescription drug benefits for both patients and payers.
Here are some key functions and responsibilities of Pharmacy Benefits Managers:
- Formulary Management: PBMs create and maintain formularies, which are lists of approved medications covered by a specific health plan. These formularies categorize drugs into different tiers, which determine the copay or coinsurance amount that the patient will pay for each medication.
- Negotiating Drug Prices: PBMs negotiate with pharmaceutical manufacturers and pharmacies to secure discounts and rebates on prescription drugs. These negotiated prices help reduce the overall cost of medications for the payer and the patient.
- Network Management: PBMs maintain networks of contracted pharmacies where plan members can obtain their prescriptions. They negotiate contracts with these pharmacies to ensure access to a broad range of medications at competitive prices.
- Claims Processing: PBMs process prescription drug claims submitted by pharmacies and ensure accurate billing and payment to pharmacies.
- Utilization Management: PBMs implement strategies to promote cost-effective and safe medication use. This may include prior authorization requirements, step therapy protocols, and quantity limits to manage medication utilization.
- Mail Order and Specialty Pharmacy Services: Many PBMs offer mail-order pharmacy services, where patients can order medications through the mail for convenience and potential cost savings. They may also manage specialty pharmacy services for medications that require specialized handling or administration.
- Medication Therapy Management (MTM): PBMs may provide MTM programs to improve patient outcomes and reduce costs by optimizing medication regimens, identifying potential drug interactions, and enhancing medication adherence.
- Data Analytics: PBMs analyze prescription drug utilization patterns and cost trends to identify opportunities for cost savings and to inform their negotiation strategies.
Critics of PBMs argue that their opaque pricing practices and rebates may lead to higher drug prices for consumers. There have been ongoing debates and efforts to reform the role of PBMs in the healthcare system to increase transparency and address potential conflicts of interest.
Overall, PBMs serve as intermediaries between pharmacies, insurers, and drug manufacturers, working to balance cost containment with access to necessary medications for patients.