Pharmacy Benefit Managers Putting Profits Before Patients

A recent white paper commissioned by the American Oncology Alliance (COA), entitled “Pharmacy Benefit Managers’ Attack on Physician Dispensing and Impact on Patient Care,” reveals that CVS Caremark is reinterpreting a CMS (Centers for Medicare & Medicaid Services) rule and formulating a policy that would effectively categorize physicians as “out-of-network”. In addition, physician-owned pharmacies would be classified as “out-of-network” as well for not meeting CVS Caremark’s conditions for retail pharmacies to participate in its network.

This policy is expected to take effect January 1, 2017. If CVS Caremark were successful in carrying out this policy—and other pharmacy benefit managers (PBM) followed suit— the healthcare landscape and delivery of care in the U.S. would be altered forever. For one, the availability of medications would shift to retail and mail order pharmacies either owned or associated with pharmacy benefit managers (PBMs), and away from patients’ primary caregivers.


While the focus of the white paper was oncology, CVS Caremark’s decision has much broader implications. Consider this: CVS Caremark is one of 5 PBMs that control network access for more than 80% of covered lives in the U.S. When it comes Medicare Part D, all payments to providers must go through these PBMs. Thus, patients who rely on Medicare for their prescriptions will no longer be able to get their medications directly from their physicians because their doctors are not part of the PBM network.

When the largest PBMs establish a trend to systematically restrict network access for dispensing physicians and physician-owned pharmacies, the quality of patient care can be expected to continue to diminish significantly. Studies have shown that when patients get their medications directly from their doctor, they not only receive their medicines immediately, they are also more likely to “stay the course” of treatment. Patient health outcomes are enhanced because primary physicians—who are in the best position to manage care—are able to integrate the delivery of care in a way that ensures utmost effectiveness and continuity.

This highly coordinated and physician-led approach to treating patients is at risk when physicians are disintermediated by PBMs in the name of profits. Specialty drugs, in particular, represent a significant source of business growth for PBMs that over the years have created their own specialty pharmacies and mail order operations for these types of medications.

The cost of specialty medications has been on the rise. From 2003 to 2014, a study from UNC-Chapel Hill found that spending for specialty drugs almost doubled. In addition, while only 2% of the population in the U.S. used these drugs in 2015, these medications accounted for a disproportionate 37% share of total spending. By 2018, specialty medications are expected to explain half of all expenditures on medicines.

Is it any wonder then that CVS Caremark—and other PBMs—want to steer patients to their own pharmacies and mail order operations for specialty medications? The economic opportunity is simply too big for CVS Caremark to ignore and there is no other way to look at its impending move as nothing but financially motivated.

CVS Caremark’s decision is not justifiable under Federal and State laws that protect the freedom of patients to select their provider, as well as require Part D sponsors to comply with Medicare’s “any willing provider” requirements. Should CVS Caremark get away with its plan, one thing is certain: the quality patient care can be expected to decline even as treatment costs rise because of limited competition favoring PBMs’ own retail and mail order specialty pharmacies.