A “pharmacy benefit manager” is a kind of middleman company that administers prescription drug benefits for insurers and employers, managing formularies, negotiating manufacturer rebates, processing claims, and overseeing pharmacy networks.
The federal 340B program costs taxpayers nothing. Under it, drug manufacturers sell outpatient drugs at a discount to safety-net providers serving high numbers of low-income Medicare, Medicaid and Supplemental Security Insurance patients. Congress created the program to allow these safety-net providers, such as AIDS Healthcare Foundation, to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” Savings from 340B help fund free and low-cost medications and medical care at rural hospitals and HIV/AIDS, diabetes, cancer, dental and primary care clinics that serve our most vulnerable citizens.
But here’s how PBMs can legally steal every day from 340B safety-net nonprofit providers that Congress intended to invest back in services for vulnerable populations.
Through corporate vertical integration, PBMs such as CVS Health, Express Scripts, and OptumRx own or control pharmacies participating in 340B, allowing them to capture portions of the drug-discount margin. Five major PBMs control 75% of 340B contract-pharmacy relationships, while more than half of contract-pharmacy 340B savings are going to CVS, which owns Aetna; Cigna, which owns Express Scripts; and United Healthcare, which owns Optum Rx.
The insidious PBM tactics include “patient steering” to PBM-owned pharmacies, preference for higher-priced drugs, restrictions on lower-cost generics and biosimilars, and retaining 340B savings rather than passing them to providers or patients.
These practices divert 340B benefits away from nonprofit safety-net hospitals, clinics, and underserved communities.
Advocates for nonprofit safety-net providers are calling for greater transparency around 340B pricing and contracts, restrictions on PBM profits from 340B, and requirements that savings flow directly to patients and safety-net providers. PBM control of the contract-pharmacy system allows large intermediaries to extract 340B margins that should instead support safety-net providers and their patients.
John Hassell is the National Director of Advocacy for AIDS Healthcare Foundation.
