A customer in the pharmacy aisle at Sam’s Club, a division of Wal-Mart Stores, in Bentonville, Arkansas.
Pharmacists around the country are agitated.
For years they’ve been watching their customers struggle to pay for prescription drugs, even when they have generic or over-the-counter alternatives. These drugs are supposed to treat simple, everyday ailments, like acid reflux and heartburn.
In the case of acid reflux, the drug in question is Nexium, and it serves as an illustration of the pharmacists’ chief complaint.
Nexium comes in many forms, including a less potent over-the-counter version. That costs between $25 and $50.
There’s also a prescription version with twice the strength. If you’re getting that one through Medicare Part D, the government’s program for prescription drugs, it could cost as much as $700.
To try to understand why, we talked to pharmacists, and they all pointed to the same thing: It’s the pharmacy benefit managers, or PBMs.
PBMs are companies that manage insurance plans for the government, employers, and other payers. They’re middlemen. For the insurance companies and employers, they help manage prescription claims. They do this in part by creating lists of drugs that will or won’t be paid for and then use their scale to negotiate lower costs.
But they also get paid by the drugmakers, who want their product on the list of approved drugs. And, because some of their fees are pegged to the drug’s price, the PBMs can actually profit from higher prices too. To the pharmacists, these conflicts are made worse by the PBM’s secretive contracts.
“PBMs operate on the back side in secret deals with drug companies to keep their drugs being used and to keep market share,” said Tim Mitchell, a second-generation pharmacy owner who operates Mitchell’s Drug Stores in southwestern Missouri.
This, Mitchell alleges, is what is going on with Nexium, a drug that has been off-patent for almost two years.
“In our contracts they say you can’t talk to the press. You can’t talk to the patients. You can’t talk to the payers. You can’t talk to anyone. Well, I’ll tell you what, I don’t care. I’m tired of them scamming Americans,” Mitchell told Business Insider. “They’re not decreasing drug costs. They’re driving drug costs.”
To be clear: The reason pharmacists have an ax to grind with PBMs is that they feel the PBMs are squeezing profits out of every part of the industry — the insurers, the drugmakers, and the pharmacists — while providing little value.
They believe that the slices that the PBMs are taking only inflate the ultimate cost of prescriptions drugs. Sometimes the PBMs even claw back profits from pharmacies. Either way, the pharmacy owners can barely say a word about their relationships with PBMs because of restrictions in their pharmacy provider agreements.
They aren’t the only ones concerned about the growing power of PBMs either. PBMs are being sued by some customers for double dealing, and they’re now also starting to draw the attention of Congress. Perhaps the biggest threat of all: They’re facing a backlash from America’s largest employers, a group of which is working on a way to rewire the system.
The reason I’m talking about Nexium is that I take the drug. In 2004, I had an invasive surgery to re-angle my stomach. I was born with it tilted the wrong way, so stomach acid was moving u