One thing I discovered is that, in some cases, if the drug is non-formulary, resulting in a higher co-pay to the employee, some of the drug companies actually offer rebates directly to the pharmacy through a rebate program the employee can subscribe to. These rebates actually apply to the employee’s co-pay, reducing their out-of-pocket expense. This isn’t always available, but it is worth checking out. In my case, my co-pay for Nexium, a non-formulary drug per our PBM, was reduced from $50 per month to $20 per month through their “purple pill program.”

HR executives should REQUIRE that PBMs supply their employees with a “prescription log” of any and all prescriptions should your company request it. Prescription logs will show the exact amount of money paid to the pharmacy for each prescription filled. If the insurance company, or the PBM state that this cannot be done, a warning bell should start to go off.

The HR dept should take a random sample of employees and request that those employees then obtain a copy of their prescription logs from the PBM/insurance company and their pharmacy(ies) and compare what was paid to the pharmacy versus what the PBM claims was paid to the pharmacy. I guarantee it will be an eye-opening experience for both HR and employees alike. A well-published study done by Creighton University cited many examples of PBM rip-offs such as paying the pharmacy $30 for generic Zantac (Ranitidine) and charging the insurance/payor $80 for that same prescription. Cost savings? Not when PBMs calculate payment from AWP (average wholesale price). By hiding under the guise of AWP, PBM create a tremendous amount of leverage for themselves by slashing pharmacy reimbursement, overcharging payors and pocketing billions of dollars in profit for themselves.

And, how about those rebates? Don’t know about rebates? Well look no further than your PBMs formulary. If a brand-name drug is “non-formulary” it means that the PBM is not receiving a rebate from the manufacturer on that drug, so it has no vested interested in your physician writing for it, or the pharmacy dispensing it, even IF your physician has tried every “formulary” drug on their list specified for your specific condition. Have you had a prescription filled several times and then been told by your pharmacist that the drug is no longer “formulary” or not covered at all (in which case the PBM offers a ‘discount rate’ by slashing pharmacy reimbursement to 7-12% over pharmacy cost)? You can rest assured that the manufacturer is no longer offering the PBM a rebate on your medication, and it doesn’t matter if its in the middle of your plan year, or you need the medication because its the only one that controls your blood pressure. Therein lies the tragedy of the rebate trail.

Ever wonder why it takes soooooo long to get a prescription filled nowadays? As a 30-year veteran of the retail pharmacy wars, I’ll tell you. Suppose as in the example cited above that your PBM won’t pay for your blood-pressure medication anymore (oh, and by the way, we are not allowed to tell you that they don’t pay in such verbage, we must say “the drug is not covered under your plan”). A message come back to the pharmacist stating that your medication is “non-formulary” and to contact your physicain to try X, Y or Z brand. We must now call your physician to get authorization to switch your medication, and 9 times out of 10, we have to wait for your physician to call us back. When your physician finally calls back an hour to 24 hours later, he prescribes brand Z, but wants you to take 1 tablet and 1/2 daily and orders 45 pills. We then transcribe the prescription (write it from telephone orders) and process it through your PBM, but now it rejects because they will only cover 30 tablets at a time, and 45 tablets is over limit. Well, here we go again… Now, multiply this scenario by several hundred prescription per day and it should become overwhelmingly clear as to why it takes such an inordinate amount of time to “just put pills in a bottle,” as we so often hear.

PBMs make billions of dollars in profit, raise the cost of prescription medication due to the millions of dollars of rebates they collect from each manufacturer in order to put their drugs on the “formulary list”, rip-off the insurance company/ payor by inflating amount actually paid to pharmacies, and cost the patient, doctor, and pharmacist lots of wasted time. Speaking of time, perhaps it is time we start asking what PBMs are actually good for, or better yet, what we need them for anyway. Fee for service anyone?