How Do We Hold A PBM Accountable?

How do we hold a PBM accountable who selects a poorer drug with weaker outcomes and higher risk?

Plan sponsors get screwed even worse than they know………………

Published on Published onSeptember 11, 2017

Dave Chase  Founder Health Rosetta Institute (501-c3)/Group (invest…

Too many PBMs are legendary in their ability to game the reimbursement system. Being a Plan Sponsor can be like playing a game of whack-a-mole. This question was asked of me via email: “How do we hold a PBM accountable (Caremark in this case) who selects a poorer drug with weaker outcomes and higher risk over a product which has been designated by the FDA as superior (which is rare)?” The crux of it was reported recentlyand I’ve excerpted it below.

On August 2, CVS Health announced that it would eschew Boehringer Ingelheim and Eli Lilly’s Jardiance in favor of Johnson & Johnson’s Invokana. This news was met with surprise for two reasons: this year the FDA said that Lilly can promote Jardiance’s ability to reduce the risk of death in patients with heart disease, and Invokana was slapped with a black box warning — the FDA’s strongest — advising that people taking the drug were at higher risk for amputations. (Jardiance and Invokana are part of a different class of diabetes drugs, called SGLT2 inhibitors.)

When asked why CVS Health removed Jardiance, a spokesperson said the decision was made by an independent advisory board of pharmacists and physicians — and also downplayed the amputation risks of Invokana. A Boehringer Ingelheim spokesperson said in an emailed statement that the company was “very disappointed” by the decision.

The conundrum that employers face

PBM makes a decision that is in direct violation of clinical protocol and FDA warnings in deference to increased rebate yield. Employer and their broker have zero clinical idea what is going on. They just know they will get a higher rebate yield that benefits them, not the member (member does not benefit from the rebate as it is payable to the plan). As we’ve seen recently with a PBM lawsuit, the manner in which the rebates are being defined (rebate versus admin fee), the plan sponsor get screwed even worse than they know.

The truly unfortunate part is many of the PBM consultants roll over on this stuff as they are being paid off by the PBM to do so. A leading benefits advisor (who wished to remain anonymous since they work with business coalitions on health) stated, “coalitions are the worst ones as they also benefit fiscally through the rebates and other incentives they have in place with the PBMs.”

With the exception of Pharmacy and Therapeutics (P&T) committees within managed care organizations that actually control their formulary decisions, reference to P&T process isn’t effective. The leading benefits described this arrangement as “a joke” since the PBM controls the formulary, not the market. P&T committees provide recommendations for the Preferred Drug List (PDL). These committees are composed of Physicians & Pharmacists who meet at least quarterly to consider PDL implementation. Most PBM P&T committees are stacked with providers who are paid to do what the PBM wishes as they “balance” the clinical value against cost implications.

We have some extraordinary benefits and pharmacy experts in our community. How would you address this? Please respond below.


Dave Chase is the co-founder of the Health Rosetta Institute (a LEED-like organization for healthcare), Managing Director of the Quad Aim Fund, Executive Producer of The Big Heist, and author of the book, “CEO’s Guide to Restoring the American Dream – How to deliver world class healthcare to your employees at half the cost.” Chase’s TEDx talk was entitled “Healthcare stole the American Dream — here’s how we take it back.” The Health Rosetta Institute is transitioning from two years of self-funding/bootstrapping and recently achieved 501-c3 status. See the Health Rosetta Institute website for how to get involved, resources and how to join others to support its mission.

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