Advanced Mediterranean Diet

…compared to 2.3% for all items in the Consumer Price Index.

Prescription drugs and hospital services each rose 3%. Physician services were up 1.4%.

Somethin’s gotta give.

Don’t blame her

The American Prospect has an eye-opening article from 2017 that sheds light on pharmacy benefits managers (PBMs). Ever heard of them?

Author David Dayen starts with comments from pharmacy owner Frankil talking about how he determines how much money he makes on retail sale of a drug:

Like any retail outlet, Frankil purchases inventory from a wholesale distributor and sells it to customers at a small markup. But unlike butchers or hardware store owners, pharmacists have no idea how much money they’ll make on a sale until the moment they sell it. That’s because the customer’s co-pay doesn’t cover the cost of the drug. Instead, a byzantine reimbursement process determines Frankil’s fee.

“I get a prescription, type in the data, click send, and I’m told I’m getting a dollar or two,” Frankil says. The system resembles the pull of a slot machine: Sometimes you win and sometimes you lose. “Pharmacies sell prescriptions at significant losses,” he adds. “So what do I do? Fill the prescription and lose money, or don’t fill it and lose customers? These decisions happen every single day.”

Frankil’s troubles cannot be traced back to insurers or drug companies, the usual suspects that most people deem responsible for raising costs in the health-care system. He blames a collection of powerful corporations known as pharmacy benefit managers, or PBMs. If you have drug coverage as part of your health plan, you are likely to carry a card with the name of a PBM on it. These middlemen manage prescription drug benefits for health plans, contracting with drug manufacturers and pharmacies in a multi-sided market. Over the past 30 years, PBMs have evolved from paper-pushers to significant controllers of the drug pricing system, a black box understood by almost no one. Lack of transparency, unjustifiable fees, and massive market consolidations have made PBMs among the most profitable corporations you’ve never heard about.

***

In the case of PBMs, their desire for larger patient networks created incentives for their own consolidation, promoting their market dominance as a means to attract customers. Today’s “big three” PBMs—Express Scripts, CVS Caremark, and OptumRx, a division of large insurer UnitedHealth Group—control between 75 percent and 80 percent of the market, which translates into 180 million prescription drug customers. All three companies are listed in the top 22 of the Fortune 500, and as of 2013, a JPMorgan analyst estimated total PBM revenues at more than $250 billion.

***

PMBs initially came about as a means of saving costs. Why hasn’t that panned out?

The biggest reason experts cite is an information advantage in the complex pharmaceutical supply chain.

***

This lack of transparency enables PBMs to enjoy multiple hidden revenue streams from every other player. “It’s OK to have intermediaries, we have Visa,” says David Balto, an antitrust litigator and former top official with the Federal Trade Commission. “But these companies make a fabulous amount of money, even though they’re not buying the drug, not producing the drug, not putting themselves at risk.”

The PBM industry is rife with conflicts of interest and kickbacks. For example, PBMs secure rebates from drug companies as a condition of putting their products on the formulary, the list of reimbursable drugs for their network. However, they are under no obligation to disclose those rebates to health plans, or pass them along. Sometimes PBMs call them something other than rebates, using semantics to hold onto the cash. Health plans have no way to obtain drug-by-drug cost information to know if they’re getting the full discount.

***

It’s a long article and I confess I haven’t read the whole thing yet. I’ve read enough to rile up my sense of indignation! Pharmaceutical companies and health insurers don’t seem too upset. Because any costs associated with these third-party shenanigans is simply passed on to the consumer—that’s you—in higher insurance premiums, deductibles, and co-pays.

Steve Parker, M.D.

PS: Reduce your needs for drugs with a healthy diet and lifestyle. I can help.

Click the pic to purchase at Amazon.com. E-book versions also available at Smashwords. com.

…according to an article at JAMA Network.

Let’s face it, there’s always going to be some waste. The authors of the study at hand figure that, whatever the dollar amount of waste is, we can reduce it by 1/4. Which could be $250 billion.

That diastolic number (91) is too high

A prior study indicated that 30% of healthcare spending may be considered waste. Is that still valid?

Researchers reviewed the pertinent literature from January 2012 to May 2019 focused on the 6 previously identified “waste domains”:

1. failure of care delivery
2. failure of care coordination
3. overt-reatment or low-value care
4. pricing failure
5. fraud and abuse
6. administrative complexity

Waste-related costs were converted to 2019 dollars.

From the abstract:

Findings

The review yielded 71 estimates from 54 unique peer-reviewed publications, government-based reports, and reports from the gray literature. Computations yielded the following estimated ranges of total annual cost of waste: failure of care delivery, $102.4 billion to $165.7 billion; failure of care coordination, $27.2 billion to $78.2 billion; overtreatment or low-value care, $75.7 billion to $101.2 billion; pricing failure, $230.7 billion to $240.5 billion; fraud and abuse, $58.5 billion to $83.9 billion; and administrative complexity, $265.6 billion. The estimated annual savings from measures to eliminate waste were as follows: failure of care delivery, $44.4 billion to $93.3 billion; failure of care coordination, $29.6 billion to $38.2 billion; overtreatment or low-value care, $12.8 billion to $28.6 billion; pricing failure, $81.4 billion to $91.2 billion; and fraud and abuse, $22.8 billion to $30.8 billion. No studies were identified that focused on interventions targeting administrative complexity. The estimated total annual costs of waste were $760 billion to $935 billion and savings from interventions that address waste were $191 billion to $282 billion.

Conclusions and Relevance 

In this review based on 6 previously identified domains of health care waste, the estimated cost of waste in the US health care system ranged from $760 billion to $935 billion, accounting for approximately 25% of total health care spending, and the projected potential savings from interventions that reduce waste, excluding savings from administrative complexity, ranged from $191 billion to $282 billion, representing a potential 25% reduction in the total cost of waste. Implementation of effective measures to eliminate waste represents an opportunity reduce the continued increases in US health care expenditures.

Source: Waste in the US Health Care System: Estimated Costs and Potential for Savings | Health Care Policy | JAMA | JAMA Network

Here’a radical idea. Why not stay out of the healthcare system as much as possible by getting and staying as healthy as possible? I have few ideas how…

Steve Parker, M.D.

Click the pic to purchase at Amazon.com. E-book versions also available at Smashwords. com.