PBMs Extend Encroachment Into Physician Dispensing


An April report from COA stated that PBMs have been calling patients and urging them to get their drugs from PBM-owned pharmacy networks, rather than through physician dispensaries. At this year’s Community Oncology Conference, presentations and discussions focused on this report.

The influence of Pharmacy Benefit Managers (PBMs) on prescription drug pricing and availability has continued to frustrate members of the Community Oncology Alliance (COA). An April report from COA stated that PBMs have been calling patients and urging them to get their drugs from PBM-owned pharmacy networks, rather than through physician dispensaries. At this year’s Community Oncology Conference, held in April in Oxon Hill, Maryland, presentations and discussions focused on this report, which also described instances of patients receiving drugs late, putting their health in jeopardy.

Josh Cox, PharmD, director of pharmacy for Dayton Physicians Network, moderated a panel discussion on legislative initiatives to combat the rising power of PBMs. In the talk, he touched on the difficulties of monitoring therapy for patients receiving their drugs from outside pharmacies as well as the murkiness of drug pricing and cash flow within the PBM systems.

This was not always the case, says Cox—in their advent, PBMs were “important and innovative,” as they improved the drug supply chain in the 1960s. Over the next 25 years, though, there was a consolidation wave among PBMs that expanded their patient network, which allowed them to acquire negotiating power over manufacturers and pharmacies.

Their role became problematic in the 1990s, says Cox, as they allied with drug manufacturers. At that point, the Federal Trade Commission began to realize that there was a conflict of interest in these relationships, as manufacturers could make sure that their drugs assumed a favorable position on formularies promulgated by PBMs. Regulators broke up those alliances.

Twenty years later, “We find PBMs vertically integrated throughout our health care system, but instead of being aligned with manufacturers, each one of the 3 major PBMs is either owned by or owns their own specialty care pharmacy, so we see ourselves back in that situation where we were in the 1990s,” Cox said.

One of the hottest issues in Congress right now is rising prescription prices, and it’s a bipartisan issue, said US Rep Earl L. “Buddy” Carter (R, Georgia), one of the panelists. Carter’s 30-year business career was in pharmacy ownership. “When PBMs first came out, they were nothing more than processors of claims, and it evolved over time into something much more than that. They will claim that ‘We hold down prescription prices.’ Well, I would submit to you, how’s that working out?” he asked the audience of oncology providers at the conference. “It’s not working out very well at all.”

Steven D’Amato, BS Pharm, executive director of New England Cancer Specialists, said that a key problem, from his standpoint, is patient access to drugs. If patients get their drugs through outside pharmacies, the wait can be longer, he said. “Certainly, every single day, our nurses and pharmacists come to me with a story on problems with access to drugs for our patients, and that delay is extreme. It could be weeks to a month before our patients receive a drug that they need desperately.” Ultimately, these delays in receiving medication affect the quality of care and make it preferable for patients to have access to drugs at the point of care—the cancer clinic, D’Amato said. “We have access to the patient’s medical record, we know the patient, we know what medications they’re on, we can really take care of the patient. When dose changes occur, we’re on top of it.” It frequently happens that patients who try to obtain their medications through outside pharmacies don’t get them on time, he said.

Carter urged COA to press the issue on Capitol Hill, but warned that PBMs have extensive lobbying power in Congress and that there will be pushback against any legislative initiatives that would take away from their dominance of the prescription drug market. D’Amato agreed that COA needs to step up its efforts to restore control over prescribing to physicians. That includes shedding more light on how PBMs operate and establish prices for drug products, he said. “They’re in it to make a profit—there’s no transparency. Their methods and equations are a black box,” he said.

Members of the discussion panel described a trend of “prescription trolling,” whereby patients are contacted directly and asked to have their prescriptions filled at a PBM pharmacy rather than through a physician’s dispensary. They said this happens frequently and is worrisome because physicians lose their ability to provide patients with direct access to drugs and to closely monitor when they are receiving their medication, the instructions they receive, and their adherence to the therapy plan. Further, they said, physician-ordered changes in therapy may not be reflected in the prescriptions that patients continue to receive from PBMs. Because of this, practices end up throwing away unneeded quantities of expensive medication that had been issued to patients.

COA is developing a tool for tracking the amount of prescription waste through this process, panelists said. Panelist Johnathan E. Levitt, Esq, a founding partner of the law firm Frier Levitt, which has mounted numerous lawsuits against the PBM industry, described prescription trolling as “absolutely illegal” under the Health Insurance Portability and Accountability Act. “Nobody should accept a PBM calling up your patient” and trying to take away dispensing authority, he said.

The panel also addressed the issue of direct and indirect remuneration (DIR) fees, which involve PBMs collecting a percentage of drug costs from pharmacy providers via rebates and pharmacy concessions. These transactions often are not immediately reported to CMS, and patients pay higher cost shares than they would otherwise, according to COA and CMS. D’Amato said it’s difficult, if not impossible, to challenge the DIR fees that practice pharmacies are assessed. They are “supposedly” attached to quality metrics, he said, and the larger oncology clinics are paying DIR fees that add up to millions of dollars.

Large companies, like Caterpillar, are able to control their employees’ access to prescriptions, which amount to a significant expense for employers, and this is a sign that the battle over prescription dispensing and costs can be won, panelists said.

After hearing the discussion, Kembre Roberts, wellness manager for Southwest Airlines, spoke during the audience question and answer period, stating that the airline has followed the guidance of a PBM in the sourcing of drugs for employees. “Where are we going, from an employer standpoint, when it sounds like we’re causing problems with the choices that we’re making?” she asked. In response, Carter noted that a cottage industry has grown up around auditing PBMs to ensure that they adhere to their contracts with employers to provide the best care for patients. Levitt noted that the contract between the PBM and the employer is negotiable, and 1 provision that should be included in that contract is a statement disallowing the PBM to be the exclusive provider of any drugs. Levitt also warned that a small number of firms that negotiate contracts between employers (or plan sponsors) and PBMs are paid by the PBMs. “Don’t be fooled into thinking that these middlemen are looking out for your best interests,” he said.


Community Oncology Alliance. Delay, waste, and cancer treatment obstacles: the real-life patient impact of pharmacy benefit managers (PBM). https://www.communityoncology.org/UserFiles/PBM-HorrorStories-Volume1-final.pdf. Accessed April 27, 2017.

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