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The simple corporate scheme behind massive US Brand Drug Prices

My 7-year whistleblower effort
"People Before Profits"

Forced Mail Order Pharmacy: Central to Pharma/Health Insurer/PBM price collusion, while harming patients and decimating independent pharmacies.

Across this nation, the dominant health insurer/PBMs are forcing patients and families to use their in-house mail order pharmacies for almost all chronic therapies.

The dominant health insurer/PBMs (UnitedHealth, CVS/Aeta, Cigna/Express Scripts and Humana) are routinely blocking patients from getting their prescriptions filled at local independent pharmacies, many of which have been serving their communities for generations.

In fact, in recent communications CVS has been informing patients that their chronic medications will not be covered at all if they don’t use CVS’ mail order pharmacy.

The health insurer/PBMs claim they are only forcing mail order to lower costs and improve patient care.

However, the media and internet are now rife with reports of patients and families being severely harmed by forced mail order, including medical errors, failed/wrong deliveries and other deficiencies. And of course, there are numerous reports showing that prices from the dominant health insurer/PBM mail order pharmacies are often higher than at retail independent pharmacies.

None of that is really a surprise because the main driver of forced mail order by the dominant health insurer/PBMs is money and lots of it.

The dominant health insurer/PBM mail order games  are different in the U.S. brand drug and generic markets, but the goals and results are the same. MONEY. FOLLOW THE MONEY.

Forced Mail Order & the U.S. Brand Drug Market

The big money for the dominant health insurer/PBMs is now from the secret brand drug “fees” from drug manufacturers, especially from the extreme cost “specialty” drugs that have driven all U.S. pharma growth over the past decade-plus since this scheme began with the arrival of Medicare Part D.

After widespread patent losses, brand drugs now account for less than 10% of U.S. prescriptions. However, they still account for 80-85% of U.S. drug costs, driven entirely by massive price increases due to the simple fee scheme. After massive price increases over the past decade due to this fee scheme, specialty drugs now account for 40-50% of U.S. drug spending, but only 1-2% of Rxs and treated patients.

Pharma massively raised the “sticker” prices on the few brands left (especially old specialty drugs and new ones reaching the market), while giving a percentage of the “sticker “ price to the dominant health insurer/PBMs.

With the fee scheme, both pharma and the health insurer/PBMs make a fortune, with the massive price increases and drug costs are passed on to us.

Both pharma and the dominant health insurer/PBMs have worked very hard to keep this simple scheme secret for 15 years now. Most importantly, because the law and the Part D regulations clearly require that these “fees” be paid at a “fair” price for legitimately helping patients, not just for massive price increases as has been routinely done. All discussed in detail in the whistleblower court documents found on the website.

Of course, these dominant health insurer/PBMs also don’t want to disclose or share these pharma “fees” with anyone else, especially community/independent pharmacies. That is where forced mail order comes in, especially for high cost “specialty” drugs.

As per IMS (the dominant data source for the drug industry), about 85% of U.S. specialty drugs are now distributed by  mail order specialty pharmacies controlled by the four dominant health insurer/PBMs (UnitedHealth, CVS/Aetna, Cigna/Express Scripts and Humana).

Independent pharmacists have  been almost entirely cut out of the U.S brand specialty drug market and most of chronic brand drug market overall.  

For high cost “specialty” drugs, we are talking about very big “fee” money for the big four health insurer/PBMs from pharma.

As per the dominant pharma lobby group, PhRMA, the average fee for a “specialty” drug is 8%. See link to the whistleblower complaint discussion of this 2017 PhRMA publication:/wp-content/uploads/2020/01/SDNYPhRMA.pdf

For a U.S. multiple sclerosis (MS) drug, with a U.S. “sticker” price that has shockingly gone from about $10,000 to more than $100,000 since Part D began, we are talking about $8,000 in “fees” paid the dominant health insurer/PBMs for each U.S. MS patient per year or about $667 per monthly Rx.

For cancer drugs that now routinely cost $150,000 to $250,000 per patient per year, the “fees” could be $20,000 per patient/year or about $1,700 per monthly Rx. And remember, the rebates/discounts on these specialty drugs are typically very low or zero!

And what “patient support” are these dominant health insurer/PBMs providing to earn this big pharma “fee” money?

Not much according to physicians and patients. Think about it. How much “support” is even possible for these complex specialty patients when the dominant health insurer/PBMs have virtually no direct contact with them from their far away mail order pharmacies? See link to whistleblower document discussions with expert physicians: /wp-content/uploads/2020/02/SDNYMDInterviews.pdf

Keep in mind, for each individual U.S. brand drug, the pharma company almost always gets most of the money from the massive drug prices while throwing blame around. Please see the telling graphs in the “Worst Offenders” section of the website; link: https://drugpricetruth.org/worst-offenders/

However, with the four dominant health insurer/PBMs controlling 80-90% of U.S. drug plans, they have gotten a cut of almost ALL U.S. brand drug price increases over the past decade-plus. As such, it is no surprise that these dominant health insurer/PBMs are among the largest U.S. public companies and the best performing stocks over the past decade, driven in large part by Medicare Part D and massive uniform US brand drug price increases. Their senior executives are routinely listed among the highest paid in the nation.

Forced Mail Order & the U.S. Generic Drug Market

The pharma/health insurer/PBM games in the U.S. brand drug market set the stage for more secret abusive games in the U.S. generic drug market.

Following the lead of the brand drug companies that began with Medicare Part D, generic manufacturers began massively raising their drug prices a few years later.

It is no surprise that one of the largest U.S. generic companies, Teva Pharmaceuticals, is also a central player in the brand drug “fee” scheme and in my whistleblower cases. Teva’s multiple sclerosis therapy,  Copaxone, has accounted for most of the company’s profits for the past decade as the drug’s U.S. list price increased 10-fold (to nearly a $100,000/patient) as use by patient sharply declined.  

Another major U.S. generic firm that started greatly increasing generic prices was Mylan, which gained infamy by massively raising the price of its only major brand, Epipen, also driven by the fee scheme. No coincidence there either.

Of course, the dominant health insurer/PBMs wanted to keep all this newfound money from severe anti-competitive U.S. generic price increases, especially for chronic drugs that drive most revenues.

Enter forced mail order for generics, under the false claim of helping patients and saving money.

On the one hand, the brand  and specialty drug mail order games are quite straightforward –  all about the pharma fees and the big money!

In contrast, in the generic market, the dominant health insurer/PBMs have employed a wide array of games/tools, in both mail order and in retail, to grab as much dollars as possible from generic drugs.

Importantly, the health insurer/PBM games in the generic market are most devastating for independent pharmacies across this nation. Now mostly cut out of the brand market by the fee scheme, independent pharmacies depend upon the more modest profits on lower-cost generic drugs for survival. As a result, independent pharmacies are now being decimated by the tactics of the dominant health insurer/PBMs, with many going out of business across the nation.

While there are various industry trade terms for the health insurer/PBM generic tactics (spread pricing, MAC reimbursement, etc.), it all boils down to the same thing. The dominant health insurer/PBM are typically charging their patients and clients (private, Medicaid, Medicare Part D, etc.) as much as they can and reimbursing others (especially independent pharmacists) as little as possible in order to maximize profits. Independent pharmacists are now commonly losing money on Rxs filled for the dominant health insurer/PBMs.

It is much easier for the health insurer/PBMs to employ their various pricing/reimbursement tactics in the generic market when they keep it all in-house with their own mail order pharmacies, with little or no transparency. So you force people into mail order.

And if this was not bad enough for independent pharmacies. In recent years, the dominant health insurer/PBMs began extracting big retroactive payments from independent pharmacies (DIR fees) in Medicare Part D.

Due to their dominance, independent pharmacists typically have no choice but to accept these onerous contracts, reimbursement rates and DIR fee extractions from the dominant health insurer/PBMs.  

In conclusion

Forced mail order is central to the pharma/health insurer/PBM abuse in BOTH the U.S. brand and generic drug markets.

The big money game is the price increase/fee scheme in U.S. brand drugs for the pharma/health insurer/PBM partners, especially for high cost specialty drugs driving the market

These dominant health insurer/PBMs are getting huge “fees” from pharma, tied to massive drug “sticker” prices and price increases, especially for mail-delivered specialty drugs.

These dominant health insurer/PBMs are getting huge pharma “fees” while typically providing little, if any, direct patient support for severely ill specialty patients.  Increasing reports indicate that patients are being harmed by escalating forced mail order.

Community/independent pharmacists have been largely cut out of this brand/specialty market, with vulnerable patients losing the opportunity for their in-person expert support.

Patients and independent pharmacies are also being severely harmed by the array of tactics by the dominant health insurer/PBMs in the U.S. generic market, which accounts for most of the volume in this country.

All of this is inter-related and all Americans are being harmed. Drug costs have greatly escalated while health/patient care has deteriorated. These ongoing and escalating abuses must be stopped.

I would greatly appreciate your sharing this blog post and the website. Thanks for your interest.  

I would be glad to speak with any interested party. I can be easily reached by email at info@drugpricetruth.org.

John R. Borzilleri, M.D.

4 thoughts on “Forced Mail Order Pharmacy: Central to Pharma/Health Insurer/PBM price collusion, while harming patients and decimating independent pharmacies.”

      1. BTW one of the central reasons that these dominant PBMs, including CVS, have pulled off the “fee” scheme with pharma driving these massive prices in Part D is because they are the plan sponsor, the PBM and the specialty pharmacy for all their plans. And only the plan sponsor (i.e. the insurance part) is required to file financial information with CMS…which means that CVS and the others are getting secret pharma fees tied to these massive Part D prices and not reporting the fees! Part D was designed so that the plans sponsor (i.e., insurance company) would oversee the PBMs and the specialty pharmacies. With endless mergers that were not stopped by our government, the few dominant companies took control of it all. Wolves guarding the hen house is an understatement for what is going on in Part D, as well as the private insurance market now. All in the whistleblower documents..worth reading if you have time. Thanks again for your interest. Please share the site with any and all. The abuse must be stopped…we are all being harmed more every day. John

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