Michael D. Hogue, PharmD, FAPhA, FNAP, FFIP

Michael D. Hogue, PharmD, FAPhA, FNAP, FFIP

Michael D. Hogue is the 15th Executive Vice President and Chief Executive Officer of the American Pharmacists Association (APhA).

Read more about Michael 

Published on Monday, July 26, 2021

Calling balls and strikes on PBMs—and the other players, too

It should be abundantly clear that APhA has several bones to pick with big pharmacy benefit managers (PBMs). These PBMs, operating under the guise of altruism, paint themselves as saints who work to lower prescription drug prices for the masses. Instead, they actively game the system by knocking out pharmacy competitors, reducing patient access to medicines and pharmacist services, and ripping off patients, employers, and taxpayers.

The greed and gamesmanship of large, non-transparent PBMs is unconscionable, and it has to stop. Transparency is a necessary disinfectant, and APhA is looking to apply it liberally.

APhA has jumped into the “fix-the-PBM-problem” arena with full force. Recently we joined as a co-plaintiff in a lawsuit against HHS to bring transparency and clarity to drug prices at the pharmacy counter and move all DIR fees and other clawbacks to the point of sale. 

We also were instrumental in partnering with our DIR coalition to introduce legislation in the U.S. Congress to move all DIR and price concessions to the point of sale. In addition, APhA helped influence fights for PBM oversight in the states and the U.S. Supreme Court by filing amicus briefs supporting state regulation of PBMs.

But while the board rooms of PBM oligopolies have their trove of dysfunctions, in many of those dark enterprises are some of our brothers and sisters in white coats—and what they provide to patients and payers can be immensely valuable.

Today, I’d like to give a shout-out and recognize our pharmacists, student pharmacists, and pharmacy technicians who are doing their part within PBMs and health plans across the country. And here’s why.

Prior to taking my role here at APhA, as a member of the Ohio Pharmacists Association, I got to meet a number of outstanding managed-care pharmacists who occupied pivotal roles, including formulary design, utilization management, mail-order pharmacy, care coordination, deployment of pharmacist services, and rooting out fraud, waste, and abuse.

Formulary design
It’s no secret that prescription drug prices are exceedingly high, and while a majority of the medications can bring tremendous value even at their high price tags, we as pharmacists all know that there are many drugs whose juice isn’t worth the squeeze.

Back in 2015, as chief pharmacy officer at the Cleveland Clinic, I teamed with reporters at the Wall Street Journal to call out egregious drug price increases by bad actors like Valeant. Our PBM and managed-care pharmacists, when weaponized properly by their bosses, are vigorously working to ensure that minimal-value drugs with high price tags don’t end up breaking the bank for employers and taxpayers.

Of course, it’s true that PBMs also make big bucks on drugmaker rebates that push drug list prices up and often compromise the PBM’s ability to objectively manage a formulary properly in the true interest of their clients.

Utilization management
Another way to control drug costs and prevent unnecessary fills of medications is for PBM and managed-care pharmacists to deploy utilization management tools.

While many pharmacists do an outstanding job in this regard, the tools are not without their drawbacks, and the PBMs that employ pharmacists are also well known for their mail-order pharmacy auto-refill programs. In these programs, it’s not uncommon for patients to be repeatedly shipped medications that they do not need or want, which significantly adds to the amount of waste in the system.

Mail-order pharmacy
Speaking of mail order, for decades, many patients who either can’t access or prefer not to use a local pharmacy have relied upon mail-order pharmacies to receive their medications. Our mail-order pharmacists (when resourced properly) take great care to ensure that the right patient gets the right medication at the right time.

While those pharmacists do amazing work for patients, unfortunately, the PBM business model unfairly presses or compels patients to use their pharmacies against their wishes. Often the mail-order companies don’t staff their pharmacies well enough to offer the needed customer service, and they don’t resource their distribution process enough to get medications delivered safely and on time.

Further, we have seen many instances where PBMs direct prescription traffic to the pharmacies they own, then use their unchecked price-setting capabilities to pay their own pharmacies much more than the going rate for typical drug dispensing, and sometimes even pay their own pharmacies more than competitors.

Care coordination
PBMs also own specialty pharmacies, where many pharmacists can practice within the specialty pharmacy itself or over on the PBM/managed-care side, where they calibrate treatment plans, track therapy progress, and collaborate with other care providers to maximize patient benefit from these often complex and expensive medications.

The value pitch of care coordination is its intended integration into the overall design of managed care. While this certainly happens on occasion, the lack of accountability in how PBMs are compensated for these services has created room for overcharging. We have also seen routine instances where the siloing of the pharmacy benefit leads to conflicting incentives and pharmacist isolation outside the goals and incentives of the rest of the health care team.

Deployment of pharmacist services
We have seen immense progress in state and federal programs that have begun to better incentivize pharmacist services that go beyond the dispensing of medications. I have talked with multiple managed-care pharmacists who are pioneering a care revolution that aims to unlock the full potential of our nation’s pharmacists.

And while the forward movement is frankly incredible, states like Washington know all too well the long and unnecessary gauntlet of getting some of these programs off the ground.

Rooting out fraud, waste, and abuse
Every profession and industry has its bad actors, and ours is no different. Pharmacist sleuths in the fraud, waste, and abuse departments have a necessary role in sniffing out those within our ranks who put profit over ethics.

But it is the height of industry hypocrisy for PBMs to go after nefarious acts that inflate costs to the system and then turn around and inflate costs themselves.

The truth is that all across our profession, there is good, bad, ugly, and everything in between. We have fantastic people working at large pharmacy chains. Our independent pharmacies are pillars in their communities. Industry pharmacists are helping to bring about the next generation of cures. Health-system pharmacists are integral members of their care teams. Does that mean all of those pharmacists and all of those companies are perfect? Hardly.

I say this because APhA is going to call balls and strikes, and we’re going to do it with everyone. Because if dysfunction is permitted to flourish within our profession, our profession will continue to be dysfunctional.

Just because the business model of big PBMs has become layer upon layer of scams, it is important to remember that many of our colleagues are doing good work within the walls of those enterprises as well. And we need to recognize and support them—just as we do all other pharmacists.

And in our ongoing effort to advance the profession, we will continue to seek out collaborators in the managed-care pharmacy world, because we know there are fantastic practitioners within the sector who can help us in our goal to raise the standard of care for patients.

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