PBMs cash in on contract loopholes

Each year, PBMs swindle governments, employers and insurance companies out of big bucks by deliberately misleading clients in their contracts.

Do you know what a “branded generic” is? It’s a clever term invented by PBMs. We all think “generic” means cheaper—right? Well, yes. But, no, not when it’s a branded generic.

Say what? Exactly. It’s an intentionally misleading term in contracts that bilk unsophisticated, trusting clients.

Manipulating the way they categorize drugs enables PBMs to line their wallets by charging higher brand prices for generics, classifying generic drugs as brand drugs in order to keep rebates/kickbacks from drug manufacturers rather than passing them on to employers or insurance companies, and essentially lying about generic drug utilization rates so they can attract more customers.

Most payers are unaware of this issue until after the fact, when they find out through an audit they’ve been bamboozled. At that point, there’s little they can do to resolve it. [We need to point out that too few employers know how to audit a PBM contract. More to come on this problem!]

The large PBMs’ response to this issue is that their manipulative behavior is the industry’s standard.  Well, no kidding, if by industry standard they mean always looking for a profit on the backs of those they are supposed to serve.

PBMs weasel out of paying bills on time

If the companies known as pharmacy benefit managers were like the rest of us, they’d have lousy credit. But because they make so much profit by holding onto employer and patient money intended to reimburse pharmacists, the PBMs are fighting legislation to make them pay their bills on time.

PBM lobbyists claim that paying pharmacists within 30 days would be costly and hinder antifraud efforts. This argument—made by those who rake in record profits while facing lawsuits for unethical business practices—makes no sense. But when you take a look behind the scenes, it’s easy to see why they want to maintain the status quo. PBMs earn interest on the money they owe pharmacists, so as they see it, the longer they can hang on to it, the better. Meanwhile community pharmacies sometimes wait up to 90 days to be paid, and are forced to take out loans to pay their own bills.

Pharmacists electronically verify insurance coverage with a PBM at the time a doctor sends in a prescription or a patient brings in a prescription. So it stands to reason that the PBM can electronically transmit reimbursements to the pharmacy on time. But the PBMs are hanging onto every penny as long as they can.

Pharmacists are trying to cure this problem of slow pay through congressional action on legislation (HR 5182) that would require drug plans to pay all electronic clean claims within 14 days and to notify pharmacists within 10 days of problems in submitted claims.

Ultimately, patients will pay for this system of slow pay that only benefits greedy middlemen. When community pharmacies are forced out of business, patients will lose access to their local pharmacists, who offer lower-cost drugs and face-to-face care. And while patients end up in the emergency room for problems that could be avoided through commonsense prescription drug policy, PBMs will be laughing all the way to the bank.