"When injustice becomes law, resistance becomes duty."
Anonymous Activist
Imagine for a moment a scenario that could unfold someday. I won't be the Senator but the one who is there should be this tough:
A US Senator heading a subcommittee inquiry into the Medicare Part D portion of Medicare. Because he's pretty good at research and because he has a hell of a staff, he arrives prepared with these questions and he wants them answered, without equivocation. He knows what he's talking about, and doesn't abide chicanery.
Seated at the main table, he and his peers, some staff people sit behind them. In the witness area are various lobbyists, PBM representatives and their attorneys, some witnesses from Medicare.
Small talk ensues, thanks for coming yadda yadda yadda:
"Medicare uses an outside contractor to administer the paperwork part of Part D. That administrator is a Pharmacy Benefit Management company. It is a private, for-profit, NYSE traded, billion dollar company.As such, its obligation is to its stockholders, not the nation and its people. We are, from the outset, in an adversarial position. You want to make as much money as you can; we want the most efficient and most cost-effective plan we can have.
"Having said that, I want to share a story that might clarify the image of our relationship. I call it The Dog and the Scorpion:
A dog and a scorpion find themselves together on one side of a raging river. The scorpion has an urgent need to be on the other side, for reasons known only to him. He approaches the dog ever so cautiously and says gently, “It is very important that I get to the other bank as soon as possible. But the river is moving way too fast and I fear I can’t get across on my own. You are much larger and certainly stronger than I. Can you take me there on your back?”
“But you’re a scorpion. You have a huge pincer. Your venom is fatal. Why would I do that?”
“Why would I do that,? the scorpion replies. "I promise I won’t sting you. Look, I only ask for safe passage to the other side. Once we're there you'll never hear from me again. That’s all. Trust me.”
Safely ensconced atop the dog’s head and just barely above the waves, the scorpion watches as the shore draws ever near. Within yards of landfall, his pincer penetrates the dogs skull and, immediately, his paws cease their strokes.
“Why did you do that?,” the dogs asks plaintively as his body starts to roll with the waves. “Now we’re both going to die.”
“Yes, replies the passenger. I’m a scorpion. It’s what I do.”
"What we are here to find are the answers to the following questions:
How does Medicare know if it is getting the lowest cost of prescription drugs?
How does a Medicare consumer know he or she is receiving the best available drug for their particular ailments at the best price?
"Can you explain to me as a user of the Medicare Part D system the mechanism that the PBM uses to charge the government.Specifically, can you tell me if the following information is available transparently to all parties.
- What the consumer pays in co-payments to the pharmacy
- What the pharmacy charges the PBM to fill specific prescriptions
- What the PBM charges Medicare Part D for that same prescription
- How much the consumer's Part D account is charged
- Is there a record of all transactions and costs that is transparent to all parties involved in submitting/filling prescriptions?
"As I used the earlier story to clarify my opening comments, I offer these examples to clarify my questions:
Example 1: A consumer presents a prescription to a pharmacy for a drug. The consumer knows immediately the amount of any co-pay required at time of purchase. The consumer does not know how much the pharmacy is charging the PBM or how much the PBM is charging Medicare.
This last amount is what the consumer is actually paying toward the donut hole and the amount he will be charged for his prescription while he’s in the donut hole.
The PBM receives the bill from the pharmacy for that transaction and pays it. The PBM knows both what the pharmacy charged and what the consumer paid as a co-pay.
The PBM bills Medicare Part D for the same prescription, including the price it paid the pharmacy and whatever additional charges apply.
"Medicare receives a bill for the filled prescription and associated charges it agreed to pay the PBM for its services. That bill is part of a much larger itemized list of millions of transactions the PBM processed that month, so it gets lost in the shuffle, so it's is important for clarity that I ask,
- Does Medicare get an accounting of the charge, i.e., what the pharmacy received as its payment, what the consumer paid as a co-pay, and a breakdown of the PBMs administrative charges?
- Does Medicare receive an accounting from the PBM of all rebates negotiated between the PBM and drug manufacturers?
- Does Medicare receive an accounting of any and all discounts the PBM negotiated with drug manufacturers?
The Cost of Not Knowing
Example 1: Retiree Max, a Medicare part D enrollee, fills a prescription at his local independent pharmacy. He has insurance with a co-pay. His insurance pays the rest. A PBM manages the transaction but Max doesn’t know this because the service is administrative.
The PBM charges Medicare for the transaction plus whatever fees it negotiated with Medicare. The total cost could be, and oftentimes is, eight to twenty times the actual price paid to the pharmacist. In the case of Medicare, that amount is charged against the consumer’s account. The only way Max knows about this is when he gets his Explanation of Benefits (EoB) from his insurer.
Medicare has no access to vital information it needs if it is going to control costs. It doesn’t have this access because the US Congress wrote laws in collusion with the PBMs that specifically prevent Medicare from performing its mandate. The American public thought, and perhaps still foolishly does, that the US Congress works diligently on behalf of its constituents. I hope to some day may that a true statement.
Max soon finds that he’s in the donut hole. Instead of buying his drug for ‘X’ dollars, his new out-of-pocket cost is 8-20X, until his out of pocket costs reach the upper limit, at which time his cost drop to 5% of the bill.
Max is locked into using the same pharmacy. He cannot price shop. If he could, he might find the following:
- He could pay cash for some drugs and pay less than his co-pay
- He could pay cash and pay much less than the PBM is charging his Medicare account
- He could pay cash and pay less than what he pays for his Medicare Part D premium and his co-pay
Example 2: Laura takes three drugs for depression. She pays $100/month for her Part D premium, and $50 each in co-pays for her monthly prescriptions. Total out of pocket: $250/month
The PBM charges Medicare Almost $1400/month for Laura’s drugs. Within three months she is in the ‘donut hole’, and her pharmacy bill is now $1400. She cannot afford it. She fears she’ll have to do without.
Laura does some price shopping. She finds the same drugs, in the same quantities, for $189/month TOTAL. For less than she was paying for her premium and co-pays, she has everything she needs. She dumps Medicare.
One question: Why does Medicare Part D pay $1400 for her drugs to begin with?
Answer: Because they don’t know what they need to know, what they could know and should know -- if they were not constrained by our nation’s lawmakers.
Let’s assume Laura stays with Part D throughout the year.
After she’s arrived at the other edge of the donut hole, her monthly costs drop to the premium ($100) and $70 (5% of the $1400). She paid a boatload of money.
But, more importantly, Medicare has paid over $10,000 to the PBM for drugs that should have cost it less than $2,000. Tell me, Mr. and Ms. Taxpayer, whose money did the PBM get? And, for what?
If there’s a problem with Medicare Part D, as the Republicans contend, who do you think created the problem and made it worse? This problem is a $ 2 TRILLION ROBBERY of federal monies, perpetrated by PBMs abetted by Congress.
Shall we begin?
