Thursday, November 17, 2011

Another Reason Your Prescription Costs So Damn Much. Medco Wants A Chunk Of Your Lipitor.

The whole idea of a Pharmacy Benefit Manager is that it will save an insurance plan's sponsor money. I mean, why the hell else would you hire a company to do something for you if it ends up costing you more than it would take to do it yourself? "Let us take care of the pharmacy end of your insurance plan" the PBM's say. "We know the ins and outs of the pharmacy business and can drive a hard bargain with drugstores." It's the whole reason they exist. To create savings and pass them along to the plan sponsor. Keep that in mind as we talk about this article from Friday's New York Times:

The biggest introduction of a generic drug in pharmaceutical history is being met with tough business strategies by Pfizer and pharmacy benefit companies, according to recent letters to pharmacists. Many drugstores are being asked to block prescriptions for a generic version of Pfizer’s Lipitor starting Dec. 1, when the company loses its patent for the blockbuster cholesterol drug and generic competition begins. Medco Health Solutions, among the nation’s largest pharmacy benefit managers, is one of the companies issuing instructions, seeking to have pharmacists keep filling prescriptions with the more expensive Lipitor for six months.

What? Has Medco lost its mind? Requiring pharmacies to use a more expensive drug? "Medco must be stupid" Some of you are probably thinking.

Pfizer has agreed to large discounts for benefit managers that block the use of generic versions of Lipitor, according to a letter from Catalyst Rx, a benefit manager for 18 million people in the United States. The letters have not previously been made public. 

"Oh my gosh! Medco isn't stupid, Medco is smart!" You're now saying. "After anal raping drugstores to the point where they have nothing left to give, Medco is going after the drugmakers and negotiating discounts! They really will be giving value to plan sponsors when they pass all those savings from Pfizer along!"

To which I will say..........BBBBBWWWAAAAAAHAHHHAAAHHHAAAHHAAAAAAA!!!!! You obviously don't know PBM's very well:

A pharmacy group and an independent expert say the tactic will benefit Pfizer and benefit managers at the expense of employers and taxpayers, who may end up paying more than they should for the drug. “I’m stunned,” said Geoffrey F. Joyce, an associate professor of pharmaceutical economics and a health policy expert at the University of Southern California, after reviewing the letters. “This is just an egregious case. Clearly there’s been some negotiation between Pfizer and the large P.B.M.’s saying we’re going to make this cost-beneficial to them, but the plan sponsors are going to eat it.” 

"Eat it" in this case, is a polite way of saying "take it up the ass"

Objections to the deal were raised publicly on Thursday in a news release from a group called Pharmacists United for Truth and Transparency, which opposes some tactics of pharmacy benefit managers. The statement called the move “a blatant attempt” by benefit managers to keep Pfizer’s discount while employers still have to pay the full price of the brand-name drug. 

Got that? Medco negotiated a discount from Pfizer alright, and evidently is planning on keeping it all to itself. Now I only had a few business electives in college, so maybe an MBA out there somewhere can explain to me how that's not a kickback.

But is Medco really planning on something so brazen? Why don't we just ask them directly:

Melissa Mackey, manager of public affairs for Medco, said its letter described “a custom plan design, which is not a new concept,” in which clients could “tailor their formulary to maximize value.”

That, my friends, is a textbook case of corporate bullshit. You ever need an example of how to talk without saying anything, you just go back to that quote. Why don't we try just asking them a simple question that requires a simple answer:

Asked in an e-mail specifically whether Medco would pocket the Pfizer discounts while employers and taxpayers paid more than the generic price for brand-name Lipitor, Ms. Mackey declined further comment.

Yup. Think we have our answer. And I'm thinking we can expect more of the same when Medco merges with Express Scripts and controls a third of the market.

Tell me again why I'm supposed to be afraid of socialized medicine?


Anonymous said...

from Canada:
"socialized" does not mean "dictator"

Anonymous said...

I recently spoke to a surgical nurse who was furious about "ObamaCare" since, she said, her patients could no longer afford their copays as a result. I had to point out that the healthcare overhaul doesn't go into effect for a couple of years and it was instead the present for-profit healthcare system that was overpriced -- and delivering inferior services.

If our system simply went back to cash-for-service, prices would plummet.

What's that you say? Innovation in new drugs and procedures would disappear? Whatever. Who needs to live to 85 and beyond, decrepit and miserable? And who needs another me-too drug? Brother.

Anonymous said...

Luckily our PBM contract has a pass-through provision, which means I see every dollar from every rebate, instead of playing the spread like Medco. This can make brand drugs cheaper than generics in many instances. Of course, unless that generic comes out at a considerable discount (which may happen, since they generics manuf are discussing doing this in response to Pfizer's rebate contracting), Lipitor will still only cost 10% more than the brand for the first 6 months, so not really much savings. I don't expect to reap any savings benefit until May, when the price will plummet. But if the generic manuf want to drop the price immediately, awesome. It is the number 1 drug in the world.

Anonymous said...

Lipitor is already generic in Canada... So is Nexium, and Diovan in it's various formulations...

Next year is Crestor, and a couple of other big name ones... Should be fun... :)

Mike said...

If all PBMs join to form one giant PMB that rules the market, that's basically socialized medicine right there. Or at least the first step towards it.

Pharmaciststeve said...

There is no such thing as an illegal kick-back in the "insurance world".. since they have been exempt from Sherman Antitrust by the McCarren/Ferguson Act. The last time I looked, Medco is licensed as an insurance company in all 50 states. We ought to be grateful that the rest of the business world doesn't have this exemption... at least they can be fined when they get caught doing similar things.

Anonymous said...

Never mind socialized medicine, that's corruption, failing to honor the intent of anti-trust laws, monopolization, plutocracy, and oligarchical control by Big Pharma all in one egg basket.

JimZac, RPh said...

Insurance companies have been doing this crap for a while. A few years ago I was working for Rite Aid, and I had some people on an Anthem plan where some generics were non-formulary, but, miraculously the brand names were formulary. Of course, the patients had the luxury of paying their brand name copayment instead of the generic copayment.

PBMs are probably the ONE reason why pharmaceuticals cost so much more here than in other industrialized "first world" countries.

Anonymous said...

I agree with JinZac that the cost of drugs in the US is most likely so high because of the PBM's. We see it every day. Take the coupons and Solodyn as an example. An outrageous price for something as simple as minocycline and a PBM pays part of the price of the drug. Why? Makes no sense. Of course, the exorbitant price is ultimately passed along to the patient in higher insurance premiums. And, then people wonder why insurance premiums are so high. Just look at all the crap these PBM's will cover. A much more restricted formulary could save tons of money. But, insurance is not about saving money, and neither or the PBM's. They are all about making money for themselves.

A Black Panther Forever said...

Maybe I miss that class. Socialism is when the government control the meds. This is a private company that is coralling the market. Is it possible to call Ocare "Careformetoo".for every person in the medical field that put down Ocare.....there is one that would like to insure we all have basic care. Preventive care will decrease many illnesses that presents due to the inability to afford care until it's too late. I was paying 28.00 last 3 i went and the cost even with co-pay was 108.00. I am in that category that a previous commenter wrote. I dont want to end my life giving greedy companies all my money. Life in the USA has changed for us that have supported these companies for decades.