Critically Thinking about PBM Promises

Recently, I was quoted in a USA Today article about CVS Caremark saving boatloads of money for their clients (http://www.usatoday.com/story/news/nation/2016/02/24/cvs-caremark-says-slowed-drug-cost-growth-but-critics-question-claims/80801870/). I was contacted after the reporter read a press release from CVS Caremark which stated that “CVS Health (NYSE:CVS) today announced that prescription drug trend, a measure of growth in prescription spending, for CVS Health pharmacy benefit management (PBM) clients dropped dramatically to 5 percent in 2015 from a high of 11.8 percent in 2014.” (http://www.cvshealth.com/content/cvs-health-reports-dramatic-drop-in-prescription-drug-trend-despite-rising-drug-prices.

I suggest you read both the Press Release and Ms. O’Donnell’s story from USA Today. And if you are really interested read the Business Insurance article which is based on the same press release (http://www.businessinsurance.com/article/20160223/NEWS03/160229946/proactive-cvs-moves-kept-lid-on-prescription-drug-spending).

Why is it so important to take time out of your busy schedule to read these articles, and to read them closely? Because if the article is well documented, clear and has value, you can learn a lot about, in this case, how to manage rising drug costs. On the other hand, if the article is misleading or incomplete, the “information” provided is nothing more than a sales pitch. Most people understand that a press release is a sales pitch. My issue comes when reporters turn the sales pitch into “news” and portray the sales pitch as their own investigative reporting. Fraud can come in many forms and allowing misleading information to be presented as facts is a kind of fraudulent behavior that should be easily found with a critical and objective eye.

If you read the first paragraph of the press release and the Business Insurance article quickly, you will think that CVS Caremark’s clients’ cost went down 5% while everyone else’s costs went up 11% – or a 16% spread. In reality, CVS Caremark just slowed the growth from a 5% increase to an 11% increase or a 6% spread in growth – not quite as impressive. And a critical reader would ask: “What are those costs based on?” And the answers could be varied: Perhaps “costs” are the AWP discounted cost which is influenced by the PBM, or the cost after copays which is influenced by the plan sponsor or the undiscounted AWP cost which is driven by drug manufacturers. Another question could be: “Was the time period all of 2014 compared to 2015 or just a single “snapshot” within those years?” But there is little information and no empirical data on which CVS Caremark states this miraculous slowing of trend.

You will also notice that CVS Caremark claims to be saving clients $20 million through their use of exclusionary formularies All CVS Caremark did to save $20 million was reduce the amount of drugs that were covered under its clients’ plans, drugs which employees now have to pay full price for if the employee wants to continue on the therapy that their physicians prescribed. That tactic really isn’t management, but cost shifting. Ms. O’Donnell requested additional information which you can find in her article that the $20 million was per 100,000 employees. That sounds impressive…until you do the math and figure out that is a savings of only $200 per member. Let’s hope that your PBM can save $200 per member – isn’t that why you hire them?

I understand that reporters are often under deadlines and cannot get experts to read and digest information, let alone provide quotes. So I implore all of you to read articles on drug spending carefully. Your PBM is not reducing costs because the PBM industry has taken the stance that the increases to Average Wholesale Prices are out of their control. In essence, instead of taking on drug companies and refusing to adopt another standard of drug pricing, PBMs have opted to cost shift to plan members.  Drug companies are unregulated and have been steadily increasing AWP, on average at 10% a year (http://www.bloomberg.com/infographics/2014-05-01/drug-prices-soar-for-top-selling-brands.html#epipen and http://www.bloomberg.com/news/articles/2015-05-06/diabetes-drugs-compete-with-prices-that-rise-in-lockstep).   PBMs, instead of not accepting price increases, or renegotiating prices, simply pass those increases to consumers and plan sponsors or opt to eliminate coverage.

Like all scam artists, if the deal is too good to believe, you probably shouldn’t believe it. The press release from CVS Caremark and the Business Insurance article makes you wonder why you don’t use CVS Caremark to manage your pharmacy benefits. Who wouldn’t want lower costs by 16% and save $20 million? But Ms. O’Donnell did her homework and asked experts to critically think about the information that was being conveyed. Ms. O’Donnell’s article was not a simple rewrite of the CVS Caremark press release, unlike the Business Insurance

When you read articles critically think about information presented to you and ask yourself these questions: does the author reference empirical data or is the information based on opinion? Can the data be manipulated and does the author count on your reading the information quickly and not considering the implications? Does the article make sense, compared to what you know about the industry you work in?

In a statement by Michael Scriven & Richard Paul, presented at the 8th Annual International Conference on Critical Thinking and Education Reform, Summer 1987, Mr. Scriven and Paul define critical thinking as follows: “Critical thinking is the intellectually disciplined process of actively and skillfully conceptualizing, applying, analyzing, synthesizing, and/or evaluating information gathered from, or generated by, observation, experience, reflection, reasoning, or communication, as a guide to belief and action. In its exemplary form, it is based on universal intellectual values that transcend subject matter divisions: clarity, accuracy, precision, consistency, relevance, sound evidence, good reasons, depth, breadth, and fairness.” (http://www.criticalthinking.org/pages/defining-critical-thinking/766)

Thank you, Ms. O’Donnell, for your exemplary form of critical thinking in your coverage of this important issue.