What Does Freedom Really Mean in Healthcare?

By Randy McDonough, Kyle Shinn, and Lindsey Ludwig

As we write this blog on this 4^th of July of 2024, we are left perplexed, confused, and disappointed in the complicated, convoluted, and non-transparent system of health insurance and pharmacy benefits.  Our comments are coming from the perspective as a provider (as a community pharmacy owner) and a customer (insurance beneficiary).  What unfolded in the past week makes us feel that our rights and freedoms have been violated and it saddens us that this is even acceptable in this great country of ours—on a day when we celebrate our freedoms and the great sacrifices made to achieve our liberties. 

Approximately one week ago, community pharmacies in our state received a two-page, “Pharmacy Update” notice from a large health plan in our state in collaboration with their pharmacy benefit manager (PBM)—one of the “big three”.  The notice, which we only were given less than three work-days’ notice, informed us of a new program they were initiating on July 1^st.  This “new program” utilized an opaque system in which they were integrating their pharmacy benefit with a national drug discount card company. Due to the short notice, we had no time to prepare for this or even understand the impact.  On Monday, July 1, 2024, the impact of this so-called new program hit us with full force causing us to scramble to figure out how we deal with this as a practice and help our patients understand what is happening.   

Essentially, it’s an arrangement where if the PBM would have charged the patient a $10 copay, but the discount card would have only charged them $9, the PBM pulls in the discount card to only charge the patient $9 but then takes a $5-7 administrative fee out of the $9 so in the end the pharmacy ends up only retaining $2-4 on the sale.  The challenge with this integrated PBM/pharmacy drug discount card program is that it is non-transparent, routed through the pharmacy switch seamlessly (meaning unnoticeable), and adds this administrative fee to the community pharmacy on top of an already discounted prescription claim. The pharmacy has investment in their staff, inventory and service to the patient and receives minimal reimbursement for this, often below their cost for even the product. So, even though our pharmacy does not contract with the discount card in this program, the pharmacy is forced into this arrangement because the discount card piggybacks off other discount cards the pharmacy may be contracted with, many of which are PBM owned discount cards.  The pharmacy does not have the option of opting out of these PBM owned discount card and the PBM / plan sponsors adopting this integrated discount card program are then piggybacking off a piggyback contract to force this unsustainable model onto pharmacies.

Plan sponsors and PBMs argue this model helps to reduce patient cost; however, concerns have been raised that this program can interfere with a patient’s Coordination of Benefits between insurances if they use a secondary insurance like Medicaid, which further raises the question, is this program doing more harm than good?

 The onus is on the patient to opt-out of the program, and as customers of the insurance plan, we never received any notice of this change, nor would we have accepted it.  As a community pharmacy provider, we received short notice of its implementation, was not included in the discussions from the plan about this integrated pharmacy program, and no knowledge/understanding how to even opt out of it.  Community pharmacists are dealing with this at a time that they continue to be negatively impacted by the DIR Cliff and PBM true ups.  Nationally, all of us are aware of the numbers of community pharmacy closings (both independent and chain) due to poor reimbursement.  This program will just hasten more pharmacy closures adding further to the nationwide problem of healthcare and pharmacy deserts. 

To deal with the integrated PBM/drug discount card company program, we are making sure our patients are fully informed, and that we do not participate in the program.  If the patient wants to continue to use us as their pharmacy provider, then they must opt out of the program by calling a toll-free customer service number from the PBM.  This is adding even more confusion to the patient to an already confusing and opaque pharmacy benefit system.  And we question, how the monies flow between health plan, PBM, and drug discount card company and quite likely other stakeholders.

We are proud the be an American and for the freedoms afforded to us all.  As we looked up what it means to be free, we came across this definition: “not under the control or in the power of another; able to act or be done as one wishes.”  As we reflect on this definition and how this program was implemented with little to no communication to patients and pharmacy providers—nor feedback, it makes us wonder—does freedom really exist in the health insurance/pharmacy benefit system because it seems to us that we (community-based pharmacies) and our patients are under the control/power of them (health plans and their PBMs) with little recourse.  This is not right, and it does not match with the founding principles of our country.