(WATCH) The Middlemen

America is more medicated than ever before and, for many, the cost of prescriptions is growing out of reach. When it comes to drug prices, you may automatically think about the pharmacy, the insurance company, and the drugmaker. But there is an invisible middleman that’s started to play an increasingly large role, impacting benefits for hundreds of millions of Americans. Whether it’s for better or worse is the subject of today’s cover story.

The following is a transcript of a report from “Full Measure with Sharyl Attkisson.” Watch the video by clicking the link at the end of the page.

Like too many, Jamie Spada faced a grueling, multi-year battle with breast cancer. She used her expertise as a nurse to help her navigate the health care system and remained optimistic.

Gabriella Burst: As long as she was able to try something and put in some — and be able to fight, she kept fighting.

But Spada’s children, Gabriella and Shawn Burst, say things fell apart in 2018. That’s when their mother was prescribed a new medicine to try to slow her cancer. It became a dark turning point at a crucial time in her illness when, somehow, the prescription got held up for weeks.

Gabriella Burst: They kept coming back with issues, but it would take days for them to come back that there was an issue, and then it would take days again for them to come back with an issue.

Shawn Burst: You had someone with more hope, more conviction that she’d be saved than any other cancer patient I had ever met — that it was all taken away from her by the system.

After much investigation, they blamed delays on a little-known but important link in the medicine chain: pharmacy benefit managers.

Gabriella Burst: So, what we learned is that the pharmacy benefit managers kind of control the medications that come in through the specialty pharmacies with the insurance companies. So, they kind of have like their own discretion. They don’t really answer to anyone.

Pharmacy benefit managers, or PBMs, are private companies hired by insurance sponsors like your employer to act as middlemen for prescription drugs — to save money. They manage drug benefits and negotiate group discount prices with pharmaceutical and insurance companies.

But pharmacy benefit managers are becoming a growing sore spot among patients, doctors, and local pharmacies.

Dr. Christopher Vaughn is an owner of this cancer treatment center and medicine dispensary in Fredericksburg, Virginia.

Dr. Christopher Vaughn: A lot of our patients, especially in the world of oncology, need treatment immediately. And, unfortunately, with PBMs as sort of this mediary and third party, there’s a delay in getting access to medications, and it can be anywhere from two to four weeks.

Vaughn says pharmacy benefit managers have become more controlling, dictating what medicine patients can get, and when, and are increasing the cost of drugs.

Vaughn: I think they actually have contracts with higher-cost drugs. Unfortunately, I think that cost is then transferred to our patients. So, I think it’s actually not lower cost. I think we’re finding our patients have higher out-of-pocket costs.

Today, there are about 70 PBMs ranging from big ones that have bought their own pharmacies, like CVS’s Caremark, to smaller names you probably haven’t heard of. Together, they form a powerhouse, managing prescription drug coverage for nearly 300 million Americans who have health insurance through their employers or government plans like Medicare and Medicaid.

Congressman James Comer is the lead Republican on the House Oversight Committee. He’s among those pushing to reform pharmacy benefit managers.

Rep. James Comer: They’ve made so much money, they’ve started buying into chain pharmacies and mail-in pharmacies. They’re their own entity. They’re vertically integrated. They compete against independent pharmacies. And they manipulate the price of drugs.

As PBMs have become more influential, drug prices have skyrocketed. Prices of newly-launched brand-name drugs have risen more than 10% a year from 2008 thru 2021. Median prices for a year’s supply was about $2,000 in 2008, more than $180,000 in 2021.

Both Democrats and Republicans have put PBM executives on the hot seat. Five testified before the Senate Finance Committee in 2019. But so far, Congressional inquiries haven’t translated into action.

Comer: The PBMs have become so big and profitable, they’ve started donating a lot of money to both parties. So both parties have been turning a blind eye. So when they talk about reforming drug prices, they’ve been giving PBMs a pass, when I’m confident that if you want to reform drug prices, the first area you start to reform are the PBMs.

J. C . Scott: We represent America’s pharmacy benefit managers.

J.C. Scott leads the Pharmaceutical Care Management Association. He says rising drug costs aren’t the fault of PBMs; quite the opposite. For example, he says Hepatitis C medicine originally cost about $80,000 for a 12-week treatment, but pharmacy benefit managers quickly helped slash the price.

Scott: As soon as we got that second competing drug that did the same thing into the marketplace, and the third, then the PBMs were able to come in and begin to leverage that competition. And within the space of a year, the price of the drug, the cost of the drug, was cut in half — by 50%.

Scott’s group claims that by “leveraging competition,” PBMs will help provide savings amounting to more than $1 trillion on prescriptions over 10 years.

But what about PBM cost management that critics see as medical interference? Scott says it’s actually efficient and cost-saving, such as requiring patients to try the least expensive drug first.

Sharyl: What if my personal physician thinks a drug I need to try now, which is not the cheapest drug that the PBM may say could be effective, but the doctor disagrees — what happens when there’s a disagreement?

Scott: So, the physician and the patient always have the option to go to the drug that they decide, and then the plan sponsor or the employer, or however they’ve designed that plan, can decide if they’re going to cover that drug or not, if it hasn’t gone through the process that the plan sponsor has set up. So in that instance —

Sharyl: So they have to pay for it themselves?

Scott: — You have to pay for it yourself, unless — typically what happens is there’s a robust appeal process that is intended to work in quick enough time, depending on the patient’s need.

Yet delay was a factor, we told Scott, with Jamie Spada, the breast cancer patient whose medicine got hung up amid confusion surrounding approvals for her prescription and which pharmacy that could fill it.

Sharyl: They think the PBM system was in part responsible for this delay.

Scott: Well first, I’m very sorry to hear about that family’s experience, because we all feel that sense of urgency when a loved one is suffering from cancer or another disease. What happens sometimes in practice, it sounds like in your story that you just shared, is that that experience and that evolution doesn’t happen on a real time enough basis.

Scott says PBMs are working to address shortfalls. They also point to doctors who haven’t modernized their own systems to speed up processing and communications. He’s against congressionally-mandated reforms.

In 2018, when Spada’s breast cancer prescription finally got to her home, it had been six long weeks. Too late because, while waiting, she’d suffered such a decline, she’d been hospitalized for the last time.

Shawn Burst: There was lots of little hiccups along the way, but this was the one that was the straw that broke the camel’s back. I really think that somebody can will themselves into another six months or eight months or twelve months. And I don’t know that my mom would have lived another five years, but I think we got robbed of at least several months with my mom that we could have made memories and done things with.

Instead of delivering hope in the form of another medicine to try, her daughter ended up delivering a hard truth.

Gabriella Burst: So I had to make the hard decision to tell my mom, “Mom, the doctors say you are never going to leave here alive if you don’t go home on hospice. You are never going to leave here.” And so we had to make the decision to send her home on hospice and just let whatever happen, happen.

Sharyl (on-camera): In the absence of federal regulations, New York has created a new department specifically to work on regulating pharmacy benefit managers.

Watch story here.

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