ELI5 Pharmacy Part 3: PBMs

So, do you want to know why your drug prices are so high and all of your independent pharmacies are closing? Welcome to the middle man for the middlemen, the PBM!

This has been planned for a while, but recently, the still-a-fascist but is right in this case, Sarah Huckabee-Sanders signed into law a ban on PBMs that own retail pharmacies. I cannot understate how fucking HUGE this is. CVS, for one, is FUCKED in Arkansas if this is allowed to happen. And of course, CVS and Optim RX (Our favorite shitheads over at UnitedHealthcare) are suing over it. This is still in the early stages, and I will be following this as best I can (Since I work for Aetna, it shouldn’t be too hard.) But they are BIG MAD their game is being called out. So, let’s dive in.

What is a PBM, really?

So, here is how CVS describes their PBM:

As part of CVS Health®, CVS Caremark® plays a critical role in the health care system by negotiating low net costs for our customers while supporting safe and clinically effective products for consumers. Beyond traditional PBMs, we use an integrated model to increase access to care, deliver better health outcomes and help lower overall health care costs.

And Optim RX?

Optum Rx is comprised of pharmacists, pharmacy technicians, clinicians and health care professionals who work every day to improve health outcomes and simplify the health system for consumers. Our customers – employers, unions, health plans and governments – count on us to help them access the most appropriate medicines at the most affordable cost.

They are billed as this savior that swoops in to fight for lower drug costs against the heartless drug manufacturers, and only their brand can deliver quality and affordable care and reform the healthcare system. Seriously. Aetna always talks about this at their bullshit “town halls”.

(Never mind, they’re the reason our healthcare is out of control. Steve needs another town house, don’t you know.)

However, and here is the thing, they are basically a monopoly. It’s “vertically integrated”, but come on. Take CVS. They own retail pharmacies, Caremark PBM, Aetna Insurance, Signify Health (A home health aid company), Oak Street Health, (primary care and specialized care for the elderly) and just… so much other shit. So, for example, I am forced to have Aetna. They take $40 out of every paycheck I get. Then, I am forced to fill my prescriptions at CVS. CVS Caremark “negotiates” the prices, and Aetna “pays” CVS for the prescription.

And if it’s covered with a copay (My deductible is 5 fucking grand out-of-pocket) I pay a “discounted” fee, which, last time I had to do that, was %50 percent of $1300 bucks. Yup. They pick my fucking pocket too and force me to go without or pay a massive amount of money. And, if this is the first article of mine you’re reading, I fucking work there. Oh, and they collaborate with drug companies to give preferred costs to the people with the insurance company they own. I don’t have word on how this collaboration will affect those without Aetna insurance, but I bet it’s going to suck.

And I just found out from this article on Health Care UN-Covered (which you should follow along with Wendell Potter for very in-depth whistleblower shit. He was c-suit. I can only do so much) that part of the way these companies steal money is through HRAs, or (Health Risk Assessments). Basically, they will use these risk assessments to tag additional diagnoses onto patients for more subsidies.

Fun fact, around 2023-2024, Aetna purchased Signify Health. The biggest service they provide is the “Healthy Home Visit”. This is an in-home health risk assessment. So, that makes sense that Aetna/CVS would want to purchase this company. (More vertically integrated bullshit).

PBMs are often the most profitable arm of an insurance company.

CVS uses their own PBM to squeeze out competition, get kickbacks from drug companies, and gate-keep medication. This is why they’re now suing Arkansas for the right to keep exploiting sick people. This is an older article, but this explains it well. It’s old as well, from the before-times. So it’s much worse now.

by Charles Ornstein, ProPublica, and Katie Thomas, The New York Times

Having health insurance is supposed to save you money on your prescriptions. But increasingly, consumers are finding that isn't the case.

Patrik Swanljung found this out when he went to fill a prescription for a generic cholesterol drug. In May, Swanljung handed his Medicare prescription card to the pharmacist at his local Walgreens and was told that he owed $83.94 for a three-month supply.

Alarmed at that price, Swanljung went online and found Blink Health, a start-up, offering the same drug — generic Crestor — for $45.89.

It had struck a better deal than did his insurer, UnitedHealthcare. "It's completely ridiculous," said Swanljung, 72, who lives in Anacortes, Washington.

Remember when I noted above that CVS/Aetna had collaborated with drugmakers for preferred pricing? Yeah, guess what? Now, members of other insurance companies will see their drug prices rise. This constantly happens. Look at your formulary, and you can see the “preferred options”. To quote Wendell Potter’s excellent article:

CVS’s Caremark division generates more revenue than Aetna or even CVS’s nearly 10,000 retail stores.

And this is true. When Aetna was whining about utilization of benefits, it was stated again that Caremark was making bank. This is because of their business model:

They own providers, the insurance company that pays the providers, the PBMs that “negotiate” drug prices, and the pharmacy that dispense the drugs. Moreover, PBMs control compensation. They will often underpay independent pharmacies or pharmacies that aren’t owned by the company, and inflate reimbursement for the pharmacies they own.

This article, just put out yesterday, shows CVS texting its customers to tell their reps to scare them into opposing two bills aimed at regulating PBMs. This is, honestly, creepy as fuck. Legitimately, I don’t think I have heard of a corporation doing this. It feels fucking dystopian. I will see if I can get the talking points regarding this to see what the reps are being told.

From the article:

Vasquez said that during her pharmacy’s seven years in business, PBMs have consistently underpaid for prescription reimbursements. She claims PBMs have steered customers away from independent pharmacies like hers and toward large corporate chains or mail-order services.

“This legislation is not about us. It’s about patient choice. It’s about freedom to go to whatever pharmacy you want to go and not be told where to go,” Vasquez said.

Screengrab of the text from the linked article.

Here is an article from the NY Times (paywall-free) from October 2024 about this problem. These companies are not just inflating the cost of drugs, but are actually making it more and more difficult to get them in the first place. And now that Rite Aid is closing, they’re hoovering up those scripts as well (without adding staff to handle the load, of course)

The article includes this lovely quote from The Devil I work for, Dave Joyner, who thinks we have too many pharmacies.

David Joyner, the president of Caremark who this past week was promoted to be chief executive of CVS, said the benefit manager’s priority was to save money for employers, not to keep independent drugstores afloat by paying them more than necessary.

“I think today you would argue that there are more pharmacies than we probably need,” he said.

He’s a liar, by the way. He just wants another John Legend concert.

From the same article:

Another source of profits is the P.B.M.s’ own pharmacies. Caremark’s owner, CVS, operates the country’s largest chain of retail drugstores. And the parent companies of all three big P.B.M.s — Express Scripts is part of Cigna, and Optum Rx is a subsidiary of UnitedHealth Group — also own warehouse-based pharmacies that send prescriptions to patients through the mail.

This is a way to squeeze more profits out of their (often captive) customers. Because if you get insurance through an employer, like most people, you don’t have a choice as to what health insurance you have. That is up to HR and whichever broker makes the best sales pitch.

Here is a really impressive study about the reimbursement rates that I would highly recommend.

So, why do these companies even exist?

Extract as much profit as possible.

It’s that simple. Why do other countries have lower drug costs but no PBMs?

Because their healthcare infrastructure does not exist to generate profits. Healthcare companies are publicly traded. They exist to generate profits for shareholders. As has been documented over and over, they don’t give a fuck about you. You’re either a profit generator, who pays premiums but has low overall utilization, or a liability standing in the way of another year of record profits. They are completely unnecessary, similar to the health insurance companies.

That’s all. They shouldn’t exist, or if they do, they should be barred from being publicly traded and forced to be non-profit. This is why our healthcare is so expensive, it’s so these monsters can get another yacht.

So, I highly encourage anyone reading this to reach out to their state reps and encourage them to take action similar to Louisiana and Arkansas. If you are in those states, call your reps and let them know you support the bills. Getting rid of PBMs is one step closer to fixing our broken system.

Anyway, stay safe, especially this weekend if you are protesting.

~ Ana the insurance demon

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