ALLENTOWN, Pa., Jan. 29, 2021 /PRNewswire/ — The Lehigh County Controller’s Office reviewed Lehigh County’s prescription drug plan administered through Highmark which lost savings of almost $1.4 million, while battling a lack of transparency and openness about drug costs. The report sheds light on the middlemen of the insurance world, Pharmacy Benefit Managers or PBMs and their power.
PBM’s directly negotiate with pharmacies to determine how much they will reimburse them for the cost of their drugs and receive rebates from pharmaceutical companies to improve the likelihood that consumers will utilize a preferred drug.
These rebates should in theory be passed back to the insurer, in this case, Lehigh County. However, this process does not always occur and savings can depend in large part on the negotiation of the contract.
Lehigh County elected to choose a fixed discount structure, meaning that it received a flat rate savings for each employee on its healthcare plan. Lehigh County is self-insured. It could have elected to take full rebate value which results from savings passed from the pharmaceutical company to the Pharmacy Benefit Manager, but chose not to do this. In 2019, Lehigh County found that the actual rebate value exceeded the fixed discount by $700,000.
“This audit exposes what many of us have known, that our healthcare system is wasteful, lacks transparency and is subject to the greed of Pharmacy Benefit Managers that are more interested in profit,” said Controller Mark Pinsley.
The Controller’s Office also identified $654,749 in potential drug cost savings through evaluating competitor pricing. The Controller’s Office recommends that the county contractually obligate Highmark to utilize the lowest cost local drug price and mandate reference to the National Average Drug Acquisition Cost (NADAC) used by Medicare and Medicaid.
Lehigh County would have saved $1.6 million had it taken the rebates between 2017 and 2019.
Furthermore, the Controller’s Office took issue with Express Scripts online drug delivery service which competes with locally owned pharmacies that often offer competitive pricing. Express Scripts is based out of Cincinnati, Ohio. The Controller’s Office spoke about the practice of billion-dollar corporations shifting local tax dollars way away from small businesses within the county and state.
“Throughout the audit process my office found numerous instances in which better negotiating on the part of the county may have resulted in more savings, stronger support of local small businesses and important contractual provisions requiring transparency with the Controller’s Office on the true cost of prescription drugs,” said Pinsley.
PBM’s remain one of the most profitable corporate entities in the world. CVS Health and Express Scripts have over $278 billion in revenue annually. Disney’s total revenue in 2016 was $55 billion, according to the Pennsylvania Pharmacist’s Association.
The Controller’s Office full audit report with its recommendations, and responses from both McGriff and Lehigh County’s Department of Administration are included with the press release.
For the full audit results please follow the link: https://www.lehighcounty.org/Portals/0/PDF/controller/General_Reports/Highmark%20Audit%20Final%20Issue%20Public%20Release.pdf?ver=Bi-kgiHO6hwG0v9G811WZw%3d%3d
Contact: Joshua Siegel
SOURCE Lehigh County Controller’s Office