Pharmacy benefit managers secretly decide which prescription drugs are covered or not, critics call for more transparency

Every year, pharmacy benefit managers in the United States decide which prescription drugs are excluded from health insurance plans, and this list is determined by a secret board of doctors and pharmacists, Samantha Liss reports for the St. Louis Post-Dispatch.

Pharmacy benefit managers process prescriptions, manage billing, decide which drugs will be covered (or not) and negotiate pricing for health insurance companies and corporations.

Executives at Express Scripts, the nation’s largest pharmacy benefit manager, told Liss that the secrecy is necessary to “shield experts from the ‘tremendous’ influences of lobbyists,” she writes.

Express Scripts provides prescriptions to about 85 million Americans each year through its employer-based prescription drug coverage, Liss reports.

To be included on Express Scripts’ national list of covered drugs, known as a formulary, “The drugs are reviewed by three different committees during a four-step process,” Liss reports, with the national pharmacy and therapeutics committee making the final recommendations.

The 16-member P&T committee is “independent and objective,” Express Scripts says. It is comprised almost entirely of physicians who represent a broad rage of specialties and each member serves a three-year term, Liss reports.

The committee is self-perpetuating. Members are elected by current members, who are required to disclose their financial relationship with drug and device makers annually as well as their stock ownership and research-grant awards.

Dr. Steve Miller, Express Scripts’ chief medical officer, told Liss it was impossible to find experts who hadn’t received money from the industry.

“If you’re going to have some of the best experts, they’re going to be asked to speak and they’re going to be asked to be in (clinical) trials,” he said. “If they have no conflict at all, are they truly the experts in the field that people are turning to?”

Liss explains that “The P&T committee does not review any pricing information or potential discounts Express Scripts would receive. . . . After reviewing relevant scientific information on particular drugs and a review of its competitors that treat the same issues, the committee either recommends to include or exclude the drug from the annual list.” Drugs can also be recommended as an optional choice.

After the committee makes its recommendations, another committee, comprised of Express Scripts employees, analyzes the recommended drugs compared to the optional drugs, based on pricing. These recommendations then go back to the P&T committee for final approval, Liss reports.

Critics call for more transparency

Express Scripts, like its rivals, does not disclose the names of its committee members or any actual or potential conflicts of interest they may have, Liss notes.

Critics question why this secrecy is allowed when the rest of the industry is required to publicly disclose its financial relationships, Liss reports: “For example, drugmakers and device makers must report how much they pay doctors for perks such as food and beverage, travel and speaking engagements.”

“All of us are subject to reporting on what money we receive. These folks should do the same,” Dr. Adrian Di Bisceglie, co-director of St. Louis University Liver Center, told Liss.

It’s big money. “In 2015, about $2.6 billion in general payments were funneled to doctors and teaching hospitals across the United States, according to data from the Centers for Medicare and Medicaid Services. And another $4.8 billion in payments were made for research and ownership or investment interests,” Liss reports.

Others told Liss that such secrecy is not common in other parts of the world.

Steve Morgan, professor of health policy at the University of British Columbia and an expert on international pharmaceutical policy, said other countries name the members their expert panels, and “I can’t think of an exception to the rule. . . . You know who they are, you know about their conflict of interest.”

However, Morgan also told Liss that some countries allow the committee to cast their final votes anonymously. “The professionals who are on these committees are put under enormous pressure – political pressure, lobbying pressure from patient groups and industry,” Morgan said.

Why does it matter?

Pharmacy benefit managers say that having a national preferred formulary “curbs the rising costs of prescription drugs” and that “the threat of being excluded pressures drugmakers to lower their prices,” Liss writes.

Express Scripts recently released its 2017 list of preferred drugs, which excludes 85 medications.

That means if you are on one of these excluded drugs, you will have to switch medications. Express Scripts told Liss this would affect about 0.12 percent of its clients, or about 30,000 people.

Patients can also appeal.

“In the instances when a patient has a rare medical need that requires that she be treated with a drug that has been excluded, we have an exception process in place to ensure the patient can have that drug covered,” Express Scripts spokesman David Whitrap told Liss.

For drug manufacturers, being excluded from Express Scripts’ list of preferred drugs has financial consequences. “Usually the stock drops; usually investors react negatively toward that news,” Vishnu Lekraj, an analyst covering Express Scripts for Morningstar, told Liss.

For example, “shares of Gilead Sciences Inc. plummeted 14 percent on Dec. 22, 2014, when Express Scripts moved to exclude the drugmaker’s new, high-cost hepatitis C drug (Sovaldi) in favor of a different version from Gilead’s rival (Viekira Pak made by AbbVie),” Liss writes.

Executives told Liss that this decision “saved the health care system $4 billion in 2015.”

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