In 2012, Loretta Boesing received a mail-order shipment of her then-toddler aged son’s immunosuppressant medication, which he takes every 12 hours to prevent his body from rejecting his liver transplant. The medication, which arrived on a 102-degree day, had been shipped in a plastic envelope. Soon after taking the medicine, her son’s body began to reject his liver, leading to a terrifying two-week hospital stay. Boesing transferred his prescription to the hospital pharmacy to avoid similar issues in the future.
But years later, in 2018, after changing insurance, the family was forced to switch back to a mail-order pharmacy — over Boesing’s protests. The medication again arrived on a warm day without an ice pack; soon after, she said, her son’s labs started elevating, suggesting his body was once again rejecting the transplant. As she fought for a better option, Boesing learned that the mailing of medications is largely unregulated.
Boesing discovered that a key player in the health care landscape was to blame for her forced switch to mail-order drugs: pharmacy benefit managers, or PBMs. PBMs operate as middlemen in the health care space, managing the pharmacy benefits that an insurer offers its patients. In Boesing’s case, her insurer’s PBM, CVS Caremark, required patients to use its own mail-order pharmacy for specialty drugs, or medications that treat rare, complex and chronic conditions. Boesing began the “eye-opening experience” of discovering the many ways PBMs make medication more expensive and harder to access, while operating in near secrecy.
“Lives are on the line. Lives are being risked,” she told Truthout. “There’s so much patient harm, and no one’s doing anything to stop it.”
Boesing created a nonprofit, Unite for Safe Medications, which advocates for pharmaceutical safety and educates politicians, regulators and the public about how pharmacy benefit managers increase patient costs, overrule doctors’ prescription decisions, squeeze independent pharmacies out of the market, and rake in billions of dollars in the process. PBMs have become more powerful in recent years: The three largest now process about 80 percent of all prescriptions. And since 2018, all three merged with major health insurers, creating vertically integrated mega-companies with increasing revenue and control over people’s health care.
“Sadly, there is no shortage of awful patient stories,” said Boesing. “When I first started, it was just overwhelming … I didn’t know so many people were having similar situations that I was — and some even worse.”
In part prompted by advocacy from people like Boesing, in recent years and months, Congress, the Federal Trade Commission (FTC) and various state attorneys general have begun waging a relatively bipartisan attack on PBMs.
PBMs, which have been around since the late 1950s, claim to bring down drug prices, saving everyone money. But in reality, their role is complicated and often opaque.
While health insurers (including insurance companies, large employers and governments) directly oversee their plans’ “medical benefits,” such as doctor and hospital visits, they outsource the management of prescriptions to PBMs. In this role, PBMs create a list of drugs available under a given insurance plan, called a “formulary.” They also negotiate with drug manufacturers to set “rebates,” which are discounts calculated as a percent of the drug’s sticker price. PBMs collect these rebates from the manufacturer, passing most on to the health insurer, while keeping a cut; PBMs claim they keep about 10 percent.
On top of these rebates, PBMs rake in other unregulated fees and costs from pharmaceutical companies in exchange for favoring their drugs in the formulary. In some cases, these fees are paid to opaque subsidiaries of PBMs called “rebate aggregators,” which manage some price negotiations. The public got a glance at PBMs’ secret fees in 2017, when Express Scripts (one of the three big PBMs) sued a pharmaceutical company over unpaid invoices. In its court filings, Express Scripts revealed that it had billed over 13 times more in “administrative fees” from the pharma company than in official formulary rebates.
PBMs say their rebate system drives down drug costs. But health care advocates argue patients are the real losers. PBMs push drug manufacturers to set exorbitant sticker prices, offering spots on the formulary to those with the most profitable rebates. The resulting sky-high sticker prices lead to significantly higher patient copays. (Shockingly, while patient copays for doctor and hospital visits are calculated based on the discounted price negotiated by the patient’s insurance company, copays for prescriptions are often based on the drug’s full sticker price.) High drug prices also drive up insurance premiums, even for those without prescription medications.
PBMs often limit patients’ ability to buy cheaper generic drugs, instead prioritizing name-brand drugs on the formulary, in order to maximize their own rebates. They have also been found to routinely charge insurers far above retail price for drugs. For instance, The New York Times........