Pharmacy Benefit Managers and Drug Pricing

Final example tonight which concerns its pharmacy benefit

manager, Optum Rx.

Pharmacy benefit managers, or PBMs, are basically companies

that serve as middlemen

between drug companies and insurers.

And they have a lot of power because they decide which drugs your insurance will

cover. That is why drug companies will often give

PBMs what are essentially

kickbacks in the form of rebates of a percentage of their sales to try

and stay on

their good side. A- and over the years, Optum Rx has engaged in some truly

unsavory practices. For instance, when the opioid crisis

was spiraling out of

control, there were some who argued that PBMs should remove drugs like

OxyContin

from their lists. But Optum very much did not do that.

Instead, it asked Purdue Pharma to pay them higher

rebates going from

about 23% of every sale to about 60%.

And when a manager at Optum Rx suggested removing it from their list of covered

drugs, saying of Purdue, "They basically caused the opioid epidemic

and we're

essentially rewarding their bad behavior," another manager wrote back, "Valid

point."

"We as a company looked into this, but the amount of utilization on

OxyContin and the rebates we collect prevented us from doing it."

Oh.

And honestly, I almost respect that level of honesty.

Wow.

It is not often that you get a confession that's essentially just, "Oh, we knew we

shouldn't do this. But in our defense, we did really want to."

If, if Luigi's lawyers had just told him to

plead that way instead- ...

there's a non-zero chance he'd be walking free right now.

But it's not just opioids. The company's decisions to abruptly switch

out what

drugs it'll cover has had utterly devastating consequences.

Take what happened to Cole Schmidtknecht, a 22-year-old with severe asthma who

showed up at a pharmacy with a prescription for an Advair Diskus inhaler.

Then this happened.

Cole had insurance through his Wisconsin employer.

What he didn't know, his parents say, is that Optum Rx, the pharmacy benefit

manager for his plan, changed its list of covered drugs.

The preventative Advair Diskus inhaler he had used for years cost Cole no more than

$66.86. Suddenly, it's price tagged over

$539.

Holy shit, that is a nasty surprise.

'Cause there are things that you expect to cost $500,

like a Nintendo Switch or

tickets to see Ed Sheeran two weeks ago.

They're, they're cheaper now, apparently.

But being able to breathe is not one of them.

And frustratingly, Optum Rx even later admitted

that it replaced that Advair Diskus

on its coverage list not for medical reasons, but based on rebates the

manufacturers of similar competitive drugs agreed to pay.