Tag: Drug Policy

Pharmacy Benefit Managers

Pharmacy Benefit Managers – Another Shadow Healthcare Actor

Posted on by jabittan
Unless you are a health policy person, I’m guessing you have not heard of pharmacy benefit managers, or PBMs. The Commonwealth Fund describes a PBM as “a company that manages prescription drug benefits on behalf of health insurers, Medicare Part D, large employers and other payers … by negotiating with drug manufacturers and pharmacies to control drug spending.” I always thought that pharmacy prices were set directly by my insurance carrier, in contracts that they had worked out somewhere along the line. But it turns out it is more complicated than that, and if you are like me, you will probably understand that PBMs provide some value, but also feel as though they are another actor doing little but driving the cost of healthcare up. For me, it is probably a bit unreasonable, but I hate PBMs.

 

In his book The Opioid Crisis Wake-Up Call, Dave Chase explains how pharmacy benefit managers negotiate rebates with drug companies and insurance carriers for specific drugs. However, the rebates don’t actually get back to the patients. Usually the insurance carrier and PBM are the ones who benefit from the rebate, and specific medications are pushed toward patients so the PBM and insurer can get the rebate. PBMs operate way in the back, and don’t get the same scrutiny as health insurance companies. They are hidden and shielded from risk, which means they have little incentive to put patients first.

 

“PBMs are typically paid by the transaction or employee; it’s not their money, so its not their risk,” writes Chase. “They may strive to handle claims quickly and efficiently, but their defenses against fraud and abuse of prescription drugs are antiquated. The shared responsibilities of the employer or government agency and the PBM create situations in which neither can see the whole picture. Criminals exploit this weakness, leading to a flood of prescription opioids on the street. The American insurance system has allowed this distribution explosion to occur, doing little to nothing to halt its growth.“

 

The quote above highlights the misaligned incentives with PBMs, insurers, and governments or employers. PBMs that hide data, favor medications for unclear reasons, and don’t face a lot of direct risk have created lots of problems for the American healthcare system. I opened with a discussion of pricing problems brought on by PBMs, and Chase’s quote shows how they have also contributed to the abuse of prescription opioids. Chase’s book, with examples like the ones laid out in this post, paints a worrying picture of pharmacy benefit managers in the United States. It is partly the complexity they add in the system, and partly the shady behind the scenes deals they are a part of that make me dislike them so much. This type of confusing and apparently unethical role for PBMs is also part of the reason that a lot of people want a universal healthcare system that is able to negotiate drug prices and set specific limits on some costs. It might not save everyone a ton of money in the long run, but it might be more ethical and clarify some of the most confusing parts of the system.
Drug Policy as Electoral Strategy

Drug Policy as an Electoral Strategy

Posted on by jabittan
One of my big takeaways as a public policy student at the University of Nevada was that public policy is not detached from our values. We like to think that elected officials and public administration officials are able to look at the world rationally and make judgments based purely on empirical facts, but this is not the case. Our values seep into all of our judgments and influence what we find as good or bad evidence. A good example of this at the federal level is Richard Nixon’s drug policy.

 

Drug policy seems like an area where empiricism and facts would rule. It feels like an area where we could identify the harms of drug use, estimate the social costs of drugs, and set policy accordingly, but American history shows that is not the case. John Hudak examines this history in his book Marijuana: A Short History, and shows how Richard Nixon used propaganda related to drug use to fuel his electoral campaign.

 

Hudak writes, “In fact, crafting public opinion on drug use and crime was central to Richard Nixon’s electoral strategy: he recognized that if he could stoke fears among the public about the drug problem and then position himself as the individual most capable of fighting the war against drugs, he would benefit electorally. In many ways he was right.”

 

Even though we can track drug related crimes, we can record drug overdose deaths, and we can estimate the social cost of drug use, our policies are driven more by fear and the desire to others into villains than by facts. Richard Nixon was clearly a master of understanding and manipulating public opinion, and used this reality to his advantage. Rather than encouraging public opinion to reflect the realities of drug uses, Nixon tied drug use with racial anxiety and resentment in a way that helped his own electoral fortunes. Public policy, Nixon demonstrated, was not swayed primarily by facts and logic, but by fear and irrationality.

 

For those of us who care about an issue and want to see responsible policy regarding the issues we care about, we must understand that empiricism and facts is not the only thing behind public policy. Public policy reflects emotion, power, and influence, and is subject to framing by people whose motives are not always pure. Advocating and supporting good public policy requires that we get beyond facts and figures, and understand the frames being applied to the policy in question.