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Proposed Rules Include New Ways to Satisfy Employer Mandates

The IRS has proposed new regulations that could let employers avoid Affordable Care Act employer mandate-related penalties by allowing them to reimburse employees for insurance they purchase on health insurance exchanges or the open market.

The regulations are not yet finalized, but the IRS has issued a notice explaining how applicable large employers, instead of purchasing health coverage for their workers, would be able to fund health reimbursement accounts (HRAs) to employees who purchase their own plans.

Under current ACA regulations, employers can be penalized up to $36,500 a year per employee for reimbursing employees for health insurance they purchase on their own.

Employer mandate refresher
Applicable large employers (ALEs) – employers with 50 or more full-time employees or full-time equivalents – must offer health coverage to at least 95% of full-time employees that includes:

  • Minimum essential coverage: The plan must cover 10 essential benefits.
  • Minimum value: The plan must pay at least 60% of the costs of benefits.
  • Affordable coverage: A plan is considered affordable if the employee’s required contribution does not exceed 9.56% (this amount is adjusted annually based on the federal poverty line; 9.86% will be the 2019 affordability percentage).

ALEs that fail to offer coverage are subject to paying a fine (called the responsibility payment) to the IRS.

How the new rule would work
The IRS is developing guidance on how HRAs could be used to satisfy the employer mandate.

In its recent notice, the agency addressed how the regulation will play out, as follows:

Requirement that ALEs offer coverage to 95% of their employees, and dependents if they have them – Under the proposed regs and the notice, an employer could satisfy the 95% test by making all of its full-time employees and dependents eligible for the individual coverage HRA plan.

Affordability – The employer would have to contribute an amount into each individual account so that the remaining out-of-pocket premium cost for each employee does not exceed 9.86% (for 2019, as adjusted) of the employee’s household income.
This could be a logistical nightmare for employers, and the IRS noted that employers would be able to use current affordability-test safe harbors already in place in regulations.

Minimum value requirement – The notice explains that an individual coverage HRA that is affordable will be treated as providing minimum value for employer mandate purposes.

What you should do

At this point, employers should not act on these regulations. The IRS is aiming for the regs to take effect on Jan. 1, 2020.

The final regulations have yet to be written, so they could change before they are promulgated. We will keep you informed of developments.


Number of Employers Offering Coverage Grows

The number of companies offering health insurance to their employees has risen for the first time in a decade, according to new research from the Employee Benefit Research Institute.

In 2017, almost 47% of private-sector employers offered health insurance, up from 45.3% in 2016. The percentage had previously been dropping steadily since 2008, when more than half (56.4%) were providing coverage.

The trend continues that the larger the company, the more likely it is to offer coverage, with 99% of firms with 1,000 or more employees offering health benefits.

Interestingly, the pre-Affordable Care Act numbers are higher than the post-ACA numbers, despite the fact that the law required employers with 50 or more full-time workers to provide most of their staffers with health coverage.

And the fact that numbers started ticking higher in 2017 points not so much to the results of the ACA, but that the labor market is tightening and as competition for talent increases, more employers are adding health coverage to their benefit packages, according the EBRI’s analysis.

The increases have been across all business sizes.

The percentage of employers offering health benefits in 2017, compared to 2015, is:

  • Employers with fewer than 10 employees:5% in 2017, up from 22.7% in 2015.
  • Employers with 10–24 employees:2%, up from 48.9%.
  • Employers with 25–99 employees:6%, up from 73.5%.
  • Employers with 100‒999 employees3%, up from 95.1%.

 

Another interesting development is the percentage of workers who are eligible to receive health coverage at their employer also ticked up to the highest level since 2014, the year the ACA took effect. But the number was still not as high as in 2013.

The percentage of employees eligible for health insurance is as follows:

  • 2013:8%
  • 2014:4%
  • 2017:8%

 

The takeaway: Coverage matters

The EBRI attributes the increases in both the above metrics on the fact that workers have been migrating to jobs that offer health coverage. It also puts the changes down to the strong economy, the tighter job market and the fact that group health insurance rates have been increasing at a moderate clip of about 5% a year.

It also indicates that more employers are offering coverage to recruit and retain talent.

There has been a significant drop-off among small employers offering coverage since the recession hit in 2008 (when 35.6% of firms with fewer than 10 employees offered it, a percentage that dropped to its nadir in 2016 of 21.7%).

EBRI analysts cite many factors for the larger decline in coverage offering among the smallest employers, including the effects of the recession on their businesses and the fact that their employees could get coverage on exchanges at relatively low rates thanks to government subsidies.

The overall uptick in 2017 was largely driven by small employers, meaning that they are likely having to step up to compete for talent. As competition for talent will likely continue to grow, it’s likely that more employers will continue adding health benefits, in addition to other voluntary benefits, to sweeten the pot.

If you would like to know more about your options, feel free to contact us.

 

 


Few Employees Get the Most out of Their Health Savings Accounts

While many health benefits advisers have been recommending that employees with health savings accounts use them as savings vehicles that can be tapped for future medical care, a new study finds that most people are spending the bulk of the funds.

The study by Willis Towers Watson found that 65% of workers were using their HSAs to pay for current medical expenses, and only 8% of them used them as savings vehicles for future medical expenses. The rest used their accounts only when necessary, and saved the remainder.

In short, many people are not taking full advantage of these plans. But all is not lost, with our help you can educate your staff who have HSAs on how to get the most out of them and also secure a more secure future for themselves when they will at some point need the money for medical procedures.

The study found that only 45% of employees surveyed had more than $5,000 stashed away in their HSA. So, in essence they are mostly being used as spending accounts.

Additionally, the study found that 45% of employees had chosen not to participate in their employer’s HSA plan.

One issue that’s confronting employees with HSA and 401(k) plans is deciding how much to allocate for each one. The study found that:

  • 22% of financially adept employees followed the recommended strategy of maximizing their 401(k) contributions up to their company’s match before contributing to their HSA.
  • 25% contributed to their HSA before their 401(k) if the 401(k) didn’t have a matching employer contribution, a strategy also recommended by financial experts.

 

FSAs also not optimized

Another area where a majority of employees fail to optimize their savings vehicles is flexible spending accounts. FSAs have a “use it or lose it” feature, meaning that most of the funds set aside have to be spent on medical expenses during the year, although a portion can be carried over to the next year.

Still, 32% said they had difficulties in spending all of the money in their FSA in any given year. On the flip side, 48% said they wished they had put more money into the account.

Both FSAs and HSAs are funded with pre-tax dollars from the employees’ salaries.

 

The takeaway

Willis Towers Watson recommends that employers educate their staff on how to get the most mileage out of their HSAs and provide online tools to help them decide if they should use their HSAs to pay for medical expenses or pay them out of pocket.

These online tools for making “save versus spend” decisions will often be on the HSA account’s portal or website. The tools may include retirement savings calculators and health care price transparency services.

The tools are most valuable as they can quickly help employees make sound and educated decisions. It’s been found in previous studies that one-third of employees access their HSA portals on a regular basis:

  • 38% view their account information on a monthly basis
  • 33% view their account information on a quarterly basis.

A New Health Care Model Tackles Costs, Quality Care

As group health insurance costs continue rising every year, more employers are embracing a new plan model that aims to both cut costs and improve outcomes for patients.

This trend, known as value-based primary care, is a bit of an umbrella term for various models that involve direct financial relationships between individuals, employers, their insurers and primary care practitioners. Insurers are experimenting with different model hybrids to find better care delivery methods that reward quality outcomes and reduce costs.

This new approach was made possible by the Affordable Care Act and the Medicare Access and Child Health Plan Reauthorization Act. And as the future of the ACA remains in doubt, the enabling parts that allowed for this system of payment reform that rewards health care providers that produce better quality outcomes for lower costs will likely remain intact.

And now more health plans are adopting this model. The 2016 “Health Care Transformation Task Force Report” found that the share of its provider and health plan members’ business that used value-based payment arrangements had increased from 30% in 2014 to 41% at the end of 2015.

In a McKesson white paper, payers reported that 58% of their business has already shifted to some form of value-based reimbursement.

How does it work?

First, let’s look at what the value-based primary care model is not: it’s not a fee-for-service system, under which when doctors see a patient and deliver care, they then bill the insurer a fee that is directly tied to the service they provided.

Fee-for-service arrangements have a fee schedule that lists the usual and customary charges for thousands of different procedures. The payment amounts will vary also based on the

reimbursement rate negotiated between the insurer and health care provider.

The part of the equation that’s missing is that the there is no direct link between the payment and the outcomes of the care. The insurer does not look at if a person was cured or has recovered successfully. There is only a link between the service provided and the payment.

Many value-based models provide a payment bonus to doctors and hospitals that produce better quality outcomes, like if they have more patients who don’t relapse or who recover at a slower pace and require more doctor visits.

Providers of value-based primary care typically charge the health plan a monthly, quarterly or annual membership fee, which covers all or most primary care services, including acute and preventive care.

The main goal is to get away from the fee-for-service system which puts pressure on doctors to only provide very short primary care visits with their patients, who will often send the patient out for unnecessary high-margin services such as scans and specialists and/or write excessive prescriptions. By eliminating this billing structure, doctors are able to practice more proactive care, which can reduce or eliminate certain future health care costs.

But just because the model is patient-focused, it does not mean that costs are higher. Proponents of value-based care say the focus on patients, and focusing on preventative and forward looking care rather than reactive care, reduces overall costs, which should be reflected in premiums.

Some benefits to patients include:

  • More time with their doctor
  • Same-day appointments
  • Short or no wait times in the office
  • Better technology, e.g., e-mail, texting, video chats, and other digital-based interactions
  • 24/7 coverage by a professional with access to their electronic health record
  • More coordinated care.

 

Vale-based care also improves provider experience and professional satisfaction, which, in turn, is known to improve the quality of care.


New Rules Lay Down Law for Group Plans in 2019

In the final rules that the Centers for Medicare and Medicaid Services released for 2019, it also covered annual cost-sharing limits for group plans, rules on SHOP exchanges, and grandfathered plans, among other items we’ve covered earlier.

Here we break down some of the focuses of the 2019 rules:

Annual cost-sharing limits for group plans –  The maximum annual limit on cost-sharing for 2019 will jump to $7,900 for self-only coverage and $15,800 for other than self-only coverage. That’s up from $7,350 and $14,700, respectively, for this year.

New rules for SHOP –  Starting in 2019, the Small Business Health Options Program will no longer be required to provide employee eligibility determinations or appeals, premium aggregation or online enrollment. The SHOP scheme was created as a way for small employers to shop on an exchange much like individuals buying Affordable Care Act plans on marketplaces do.

SHOPs will still be required to determine employer eligibility for the SHOP and certify each qualified health plan available through the SHOP. However, enrollment will not be done online, but rather through agents and brokers who have registered with SHOP or an insurer offering a qualified health plan.

Notably, the small business health care tax credit will remain in place for eligible employers. SHOP will still have a website that includes information on the plans in all geographical areas, a premium calculator and access to customer service where SHOP personnel can answer questions.

One other item that will stay in place is the “rolling enrollment” rule that allows employers to buy SHOP coverage at any point during the year if they meet certain criteria.

The main reason for these changes is that SHOP enrollment has been well shy of expectations, so CMS is looking for ways to continue offering the administration functions required by the ACA.

That said, state-based SHOPs will still have leeway to maintain their current operations as they see fit. But for the most part, starting with the 2019 policy year, federal and state SHOPs will mainly rely on brokers and insurers to take on more of the responsibility for determining employee eligibility, conducting enrollment and collecting premiums.

Another grandfather extension –  CMS has extended the transitional policy that allows  states to permit insurers in small group markets to renew health insurance policies they would otherwise have to cancel because they don’t comply with parts of the ACA.

This means that states may allow insurers that have continually renewed eligible non-grandfathered individual and small group policies since Jan. 1, 2014, to again renew those policies, provided that the policies end by Dec. 31, 2019.

Health insurers that use the transitional policy will be required to send informational notices to affected individuals and employers.

 


Five Ways Employers Can Save on Health Care Costs

In recent years, many companies have been dealing with rising health care costs largely by transferring more of the expense and risk on to their employees.

But some employers have found smarter, more creative ways to limit health costs without further burdening valued employees. Here are some of the best solutions:

  1. Pharmacy benefit managers. Pharmacy benefit managers are independent third party administrators who work with pharmacists, employers and workers to reduce costs and inefficiencies. For example, they may help workers migrate from expensive brand name drugs to equally effective generics for a fraction of the cost.
    Or they may be able to migrate workers from bricks-and-mortar pharmacies to mail order. They also assist employers with contract negotiations.
  2. Telemedicine. Some companies are contracting with doctors to provide health services online, via a video feed. It’s no substitute for an in-person examination, but workers can get consultations and routine assessments done and get a prescription for a fraction of the cost of an in-person visit. Furthermore, the worker doesn’t have to take time off work for an appointment. It can be done from the office.  A typical insurance billing for a basic medical appointment can run as high as $150. But a telemedicine visit can cost about a third of that amount, according to reporting from U.S. News.
  3. Wellness programs. Healthy employees cost much less than sick ones over time. Smokers and the obese generate much more frequent and higher medical claims than normal-weight employees.
    Employers are fighting back by offering access to smoking cessation and weight loss programs, as well as additional programs for the management of common conditions such as high blood pressure, diabetes and asthma. About 58% of health plans nationwide offer an incentive for participating in a wellness program, according to research from CEB, the best-practice insight and technology company.
  4. Consumer-directed health plans. Employers are also giving employees greater control over their spending decisions. They are doing this via high-deductible health plans, which come with access to health savings accounts. These allow either an employee or an employer to contribute pre-tax dollars to an HSA. Withdrawals from an HSA to pay for qualified health care expenses are tax-free.
    These plans are less expensive for employers than comparable traditional insurance plans, and can work very well for employees in good health. Some employers choose to contribute to HSAs on their workers’ behalf.
  5. Transparency tools. Cost-transparency tools make the cost of every medical procedure or service visible to employers and patients alike.

 

A claims analysis from UnitedHealthCare found that those who used the company’s transparency tools spent an average of 36% less on health services. When consumers used price-transparency tools, CEB researchers found an average saving of $173 for employees and $409 for employers per procedure.


Drug Costs Starting to Drive Group Plan Inflation

Under the Affordable Care Act, group health insurance costs have been rising at a much slower rate than they had during the decade preceding its passage.

In fact, the rate of annual premium growth in the group market has hovered around 5% – more than half of what it was between 2001 and 2010. Also, health care’s share of the national economy actually fell from 17.4% in 2010 to 17.2% by 2013. However, that trend hasn’t lasted and in 2016 the share was 17.9%.

There has been a lot of debate about why rates have been increasing and some pundits say that if it were not for spiraling pharmaceutical costs, the rate of health insurance inflation would be lower.

While the drug industry would deny pharmaceutical costs are what’s driving health care cost inflation, the numbers show otherwise, according to an analysis by Modern Healthcare, an industry trade publication.

Here are the figures that drive home the point. Between 2013 and 2016, personal health care consumption rose 16.7%, according to the Centers for Medicare & Medicaid Services (CMS). This is what was driving that inflation:

  • Hospital spending: Up 15.5%
  • Professional services (mostly physician office-based care): Up 16%
  • Drug spending: Up 23.9%

Source: CMS

For 2018 group health plans, the inflation components of the three main areas could not be starker:

  • Hospital costs: 6.1% (from 2017)
  • Physician costs: 4.3%
  • Pharmaceuticals: 10.9%

Source: Segal Company

The situation may actually be worse than the numbers hint at. Retail drug sales don’t include the most expensive medicines – those delivered in hospital outpatient and physician offices. The CMS doesn’t track that data separately, but one can get a glimpse of what’s happening by examining the latest financial reports from major hospital systems.

Controlling drug costs

Prescription drug costs now account for about 17% of total U.S. healthcare spending and were the fastest rising component of that spending over the past year.

Drug costs have been difficult for health care providers and the insurance industry to tackle.

The pharmaceutical industry has been able to fend off government efforts to counter price hikes. It successfully lobbied Congress in 2003 to bar Medicare from negotiating prices in the new Part D program.

The industry has been aided by opposition from physician and patient advocacy groups, who fear that cost-benefit calculations will be used to cut them off from high-priced but effective medicines.

Benefits consulting firm Segal Company asked managed care organizations, health insurers, pharmacy benefit managers and third-party administrators to rank the cost-management strategies implemented by group health plans in 2017. Here are the top five:

    • Using specialty pharmacy management– This focuses on controlling costs of specialty drugs, many of which cost more than an annual health premium for a year’s worth of dosing.
    • Intensifying pharmacy management programs– This includes negotiating better pricing for commonly used drugs.
    • Contracting with value-based providers.
    • Increasing financial incentives in wellness plans.
    • Adopting high-deductible health plans.

These strategies show plan sponsors are looking to drive utilization to high-quality, low-cost providers in lieu of simply passing the costs on to their employees.


New Rules Allow Short-term Plans to Last up to Three Years

The Trump administration has taken another step in its effort to roll out short-term health insurance plans by extending the amount of time such plans can be in effect.

Under the new rule, which was issued August 1, short-term plans can be purchased for up to 12 months and policyholders can renew coverage for a maximum of 36 months.

These controversial plans, though, do not have to comport with the Affordable Care Act, like not covering 10 essential benefits and not having to cover pre-existing conditions – and they can even exclude coverage for medications.

As a result of the changes, the Centers for Medicare and Medicaid Services predicts that an additional 600,000 people will enroll in short-term plans in 2019, jumping to 1.6 million individuals by 2021. Part of that will include some 200,000 people who drop their plans in the individual market and sign up for short-term coverage.

That’s compared with about 122,500 people enrolled in short-term plans in 2017, according to the National Association of Insurance Commissioners. But enrollment is expected to surge now that the individual mandate penalty has been eliminated.

That said, CMS predicts that premiums for 2019 ACA exchange plans will rise 1%, while net premiums will decrease 6%.

The final rule goes into effect 60 days after it is posted, but state regulators would still need to approve any new plans that come to market. Health insurers may start selling short-term plans that last up to a year in a few months. The new regulation, however, does not require insurers to renew the policies.

Health insurers and consumer advocates have assailed the plans, saying they provide limited coverage and that many people won’t understand just how skimpy the plans are when they buy them.

They also said that if younger and healthier people gravitated to these less expensive plans, it would leave an older, sicker pool of enrollees in ACA marketplace plans, which could further force rates higher in the marketplaces.

 

New rules change the game

The renewability portion of the regulations was modeled on COBRA plans, which allow people who leave a job to continue on the same plans they had while on the job, but they have to foot the bill themselves.

Plans will be able to exclude someone based on pre-existing conditions. The plans also do not have to cover the ACA’s 10 essential health benefit categories, such as maternity care or prescription drugs, for example.

Insurers that sell these plans will be required to:

  • Prominently display wording in the contract that the plans are exempt from some ACA provisions.
  • List coverage exclusions and limitations for pre-existing conditions.
  • List what health benefits are covered.
  • Explain if the plans have lifetime or annual dollar limits on health benefits.

 

By skirting many of the ACA provisions, the short-term plans offer less coverage and are hence less expensive.

That said, states will be able to regulate these plans as they see fit. For example, California limits the time someone can be enrolled in a short-term plan, and it bars renewals.


Huge Investigation Uncovers Possible Generic Drug Pricing Cartel

An investigative report by the Washington Post has uncovered an alleged cartel among generic drug manufacturers to fix the price of some 300 medications, adding new fuel to the debate about raging price increases in the pharmaceutical industry.

While a number of name-brand drug makers have been named and shamed for their massive price increases – sometimes hundreds or thousands of percent higher – the article looks at how something similar has been going on in the generic drug market.

A case that started as an antitrust lawsuit brought by two states has spurred a massive investigation into alleged price-fixing by at least 16 companies that make 300 generic drugs. Now 47 states are party to the lawsuit, seeking to recoup perhaps billions of dollars.

In addition, pharmacies and other businesses have filed their own lawsuits against the generic drug makers. One such suit documents huge price hikes – like a 3,400% increase in the price of an anti-asthma medication – and investigators believe that generic drug producers colluded to raise prices in tandem or not make their products available in some markets or through specific pharmacy chains.

The scale of the alleged collusion was summed up by Joseph Nielsen, an assistant attorney general and antitrust investigator in Connecticut, whose office has taken the lead in the investigation: “This is most likely the largest cartel in the history of the United States,” he told the Washington Post.

If the allegations are true, the parties affected run the gamut from consumers, who have high copays or high deductibles for their pharmaceuticals, to hospitals and insurance companies. And many health industry observers were surprised to learn the news, considering that generics are supposed to be a safety net for patients to ensure access to quality medications at a reasonable price.

Two former executives of one generic drug maker, Heritage Pharmaceuticals, have pleaded guilty to federal criminal charges. They are now cooperating with the Justice Department.

The article describes the coziness among executives from competing generic drug makers and how they would allegedly collude to raise prices.

There has been no estimate of how much the generic drug companies allegedly overcharged over the years, but even if it’s a fraction of the annual sales of $104 billion a year, it would be substantial.

The drug makers that the Washington Post was able to reach denied the allegations.

Coordinated price hikes ‘almost routine’

The generics industry used to be highly competitive, according to the story, but over the years, things changed and suddenly allegedly “coordinated price hikes on identical generic drugs became almost routine,” the Post wrote.

The alleged price-fixing affects 300 generic drugs, according to the report. Generics account for 90% of the prescriptions written, however they only account for 23% of the total drug spend in the country, according to the Association for Accessible Medicines.

And still, the prices of on a benchmark set of older generic drugs in the Medicare prescription-drug program dropped 14% between 2010 and 2015.

But, for the 300 drugs in question, prices went up, according to the lawsuits. That’s why pharmacies have also come to the fore to sue. They were on the front lines when they started noticing marked increases of hundreds of percent in the prices of some generic medications.

If the collusion turns out to be true, it essentially reverses the possible gains when a generic drug enters the market. According to the Federal Drug Administration, prices fall up to 50% when a second generic enters the market. And once there are six or seven companies making the same generic drug, the price usually falls 75% from the original cost of the brand name pharmaceutical.


Skyrocketing Drug Prices Threaten Health Insurance Model

The US is experiencing a prescription drug pricing epidemic, and some drug companies are driving a wedge into the health insurance model by severely jacking up pharmaceutical prices to astronomical levels.

Unfortunately, the cost of some drugs has become so extreme that by paying for one prescription it could take decades to recoup the cost in premium collections.

The scourge was recently highlighted in an investigative report by “60 Minutes” on CBS.

The investigation reflects the difficulties facing health insurers in paying for drugs and also the fact that many pharmacy benefit managers, which are in business to rein in runaway drug costs, are not actually doing much to stem the rampant and exorbitant price increases.

The “60 Minutes” piece focused on one city which was faced with financial ruin because of the costs of just one drug for one of its employees. The city’s experience is emblematic of just how bad things have gotten.

The city of Rockford, Ill., had for years been self-insuring and paying the health care costs for its 1,000 employees and their dependents. But then one pharmaceutical busted the city’s health care budget: Acthar.

In 2015, two small children of Rockford employees were treated with Acthar, a drug that’s been on the market since 1952. It is used to treat a rare and potentially fatal condition called infantile spasms, which afflicts about 2,000 babies a year.

The drug had been affordable in 2001 when it sold for about $40 a vial. By 2015, the price had spiraled to $40,000 a vial – a phenomenal 100,000% increase.

As a result, the city paid out close to $500,000 for the two children’s Acthar prescriptions.

The problem is that Acthar is not the only drug on the market that has seen that kind of price increase. Pharmaceutical companies have been on a major price-hike spree, pushing once-affordable drugs into the stratosphere – often after one company buys the rights to a drug from another firm.

The maker of Acthar also in 2010 decided that it wanted to boost sales of the drug because there are only about 2,000 cases of infantile spasms a year. So it started marketing it to doctors for other diseases that it was not designed to treat.

The company began to market the drug for several chronic conditions like rheumatoid arthritis that affect adults, even though there was no evidence it worked for these conditions.

Prescriptions surged, and by 2015 Medicare was spending $500 million a year on Acthar.

They were able to get those prescriptions because many of the doctors who prescribed a lot of Acthar also were getting money from the company. The drugmaker paid them for speaking, consulting and conducting research studies for the company.

“60 Minutes” found that those doctors appear to be the ones who are most likely to also prescribe Acthar. The drugmaker paid doctors millions over a nearly two-year period, with the top earner getting more than $350,000. 

PBMs no help

To rein in drug costs, Medicare contracts with pharmacy benefit managers (PBMs), which are supposed to negotiate down the price of drugs. Unfortunately, the city manager of Rockford says the PBM the city was using didn’t do that.

He said that PBMs actually wield a lot of clout, but often don’t use it when they should.

Many observers say that PBMs have divided loyalties and make money when drugs are more expensive. Express Scripts, the largest PBM in the country, for example, not only is a PBM, but it also owns a pharmacy that sells expensive drugs and a company that ships and packs them.

Rockford has sued the manufacturer of the drug and also Express Scripts, which the city hired specifically to contain costs, but alleges it didn’t do.

Express Scripts has denied any wrongdoing and, in its motion to dismiss, argues it was not “contractually obligated” to contain costs.

Unfortunately, there are many players with their hand in the drug pie. Besides the drugmakers, PBMs and pharmacies, doctors can make more money by prescribing more expensive drugs over ones that are cheaper and just as effective.


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