Series on pharmacy benefit managers makes complicated topic easier to understand

Joseph Burns

About Joseph Burns

Joseph Burns (@jburns18), a Massachusetts-based independent journalist, is AHCJ’s topic leader on health insurance. He welcomes questions and suggestions on insurance resources and tip sheets at joseph@healthjournalism.org.

Photo: Thomas Hawk via Flickr

One of the most complicated topics to cover in health care today is the role of pharmacy benefit managers (PBMs). Employers and health plans hire these middlemen to manage their prescription benefit programs for workers and health plan members.

Not only do PBMs contract with health plans, but some large health plans, notably UnitedHealthcare which owns Optum, have their own PBMs. Late last year, CVS Health, one of the nation’s largest retail pharmacy chains and owns Caremark, a PBM, said it would buy Aetna, one of the country’s largest health insurers. That deal is pending regulatory review, as Bruce Japsen reported for Forbes early this month.

The fact that the ties between insurers and PBMs are close and getting closer makes covering PBMs complicated but other factors make reporting on these companies tricky: Their practices are mostly hidden from view, meaning little is known about their contracts or how those contracts work.

Katie Wedell

For all these reasons, Katie Wedell, an award-winning data journalist decided PBMs would be a worthy topic for a series. In a new “How I Did It” piece, Wedell explains why and how she decided to do a series on PBMs and how they affect what consumers pay for prescription drugs. A member of the I-Team for the Cox Media Group in Ohio, Wedell investigates government waste and fraud in her coverage for the Dayton Daily News and the Springfield News-Sun.

In March, we covered the pharmacy benefit business and how recently proposed mergers could affect PBMs and insurers.

Wedell found, as others have, that covering PBMs “sounded like a story that might cause great public outrage.” She also learned that the public is mostly unaware of how PBMs and how the entire prescription drug business work. For a look at some of the factors that lead to complexity in the PBM business, consider the reporting Bob Herman has done for Axios in recent months. Also check out this May 6  story from the CBS News show 60 Minutes, “The Problem with Prescription Drug Prices,” in which sources explain the role that PBMs play in keeping drug prices high.

Not only do companies in the prescription drug supply chain benefit from high costs, but they also do not share the details of their contracts with the public. They also prevent pharmacists and other providers from disclosing how these contracts work. As Wedell asks, “What do you mean consumers are being overcharged and the pharmacy is under a gag order not to talk about it?”

For journalists, Wedell’s experience is instructive. At first, she understood little about drug pricing and how many great stories can be told about how these companies operate.

“While public ire was mainly directed at drug manufacturers, I realized that most of our readers probably had no idea that there were so many different players in the pharmaceutical distribution system, and that to fix skyrocketing drug prices, issues would need to be addressed at all the steps in the process,” she notes.

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