At their worst, Pharmacy Benefits Mangers (PBMs) are costly and inefficient middlemen in America’s opaque drug pricing mess. At their best, PBMs negotiate lower drug prices for their customers, which are insurance companies and large corporations. Somewhere in between, PBMs look a little like the Soprano crime family muscling in on a business and skimming profits off the top, benefiting no one but themselves.
Take the recent case of OptumRX, the (PBM) owned by the same company that owns and operates insurer UnitedHealth. They are in hot water with Ohio’s Republican Attorney General Dave Yost.
Yost claims OptumRx pocked almost $16 million worth of drug discounts – $16 million he says OptumRx is contractually required to fork over to the state Bureau of Workers’ Compensation.
Law360 reports ($ wall):
Law360 (February 20, 2019, 7:38 PM EST) — Ohio’s attorney general on Tuesday said he will take OptumRx to court if the UnitedHealth-owned pharmacy benefit manager doesn’t fork over $16 million it should have passed on in discounts to the state Bureau of Workers’ Compensation after a drop in drug prices.
Attorney General Dave Yost sent a letter to OptumRx demanding mediation — as is required by their contract — to get the $15.8 million in alleged overcharges for generic drugs back, and said if mediation doesn’t do the trick, litigation is the next step.
“I don’t know what there is to mediate. They broke the contract, they took our money. I want it back,” Yost said Tuesday on a panel at the Associated Press Legislative Preview, according to footage provided by his office. “We will go to court if mediation is unsuccessful.”
Phil Kerpen from American Commitment points out on Twitter that OptumRx’s scam keeps drug prices high for you and me and actually financially benefits AARP, ironically the most vocal organization calling for drug price controls:
This is nuts.
UnitedHealth is demanding that pharmaceutical companies don’t cut their list prices.
Shows the need for Trump’s proposal to end their anti-kickback exemption. https://t.co/ndGEPN8cfR
— Phil Kerpen (@kerpen) February 8, 2019
Confused? Don’t be. It’s just a giant shell game that benefits insurance companies and liberal lobby group AARP at the expense of seniors looking for affordable medicine.
And it’s a crystal clear example of why President Donald Trump’s push for more transparency in drug pricing is a far better approach than allowing the federal bureaucracy to determine how much medicine will cost. As Newt Gingrich and Joe DeSantis write in The Hill:
This is why the Trump administration’s proposal to prevent secret rebates and discounts between drug manufacturers and pharmacy benefit managers (PBMs) and to encourage direct discounts to patients in Medicare Part D and Medicaid is so important.
Not only will this plan save patients money at the pharmacy counter, it will begin to fix the broken economics of drug pricing that cause the huge increases in prices and out-of-pocket costs we have witnessed over the past decades.
Current drug pricing structure is stuck in an escalating spiral of higher list prices (the sticker price of a drug) and decreasing transparency. The central dynamic fueling this vicious cycle is obvious: In this system, PBMs, whose job it is to negotiate drug discounts on behalf of payers such as insurers and large employers, benefit from higher list prices on drugs. This is precisely the opposite dynamic you would want if your goal is to lower prices.
As he so often does, President Trump offers solutions to big, lingering problems that may not be as trendy with the media as left-wing policies, but are a heck of a lot more meaningful to regular people.