This image shows tablets of the prescription opioid pain reliever Oxycontin (oxycodone). it … [+]
There is a tendency to overlook the many factors that contributed to the problem of misuse, abuse, overuse and diversion of prescription opioids that began in the 1990s. Typically, the media has focused on the drug manufacturers and the doctors who run the mills. tablets as the main villains. However, it is important to shed light on other stakeholders who may have caused the opioid crisis, including payers and pharmacy benefit managers.
The prescription opioid supply chain is extremely complex and highly regulated. Key stakeholders include pharmaceutical manufacturers, federal and state regulators, wholesale distributors, pharmacies, payers, PBMs, physicians and patients. With the exception of the patient, every stakeholder in the prescription opioid supply chain is licensed and the supply is regulated by the federal and state governments.
A recent Barron’s exposé details the role of PBMs in fueling the opioid crisis. PBMs are important intermediaries in the prescription drug ecosystem, holding power over which drugs patients have access to and how much they cost. What the Barron’s article fails to point out is that PBMs serve at the behest of payers, which include employers, health plans and government agencies. On behalf of payers, PBMs negotiate net prices for drugs in connection with determining their placement on formularies or lists of covered drugs.
The Barron’s report finds that the largest PBMs — CVS Caremark, Optum Rx and Express Scripts — played a role in setting the net prices and setting the formulary of OxyContin, an opioid licensed by the Food and Drug Administration that has been in center of what is often called the opioid epidemic. In a 12-month period between late 2016 and late 2017—a far cry from the prescription opioid crisis that began at least 15 years ago—these companies were paid more than $400 million in fees and rebates by Purdue Pharma, the manufacturer of OxyContin. PBMs claim that they pass most of the rebates on to their paying customers, which are employers, health plans and government agencies. Figures quoted are up to 99%.
However, according to Barron’s, PBM discounts were tied to the dose and number of pills prescribed. The higher the dose, the bigger the discount. As such, PBMs facilitated the overuse of pain medication.
In collaboration with PBMs, Medicare and Medicaid public insurance payers have played a key role in facilitating access to prescription opioids. The epidemic has disproportionately affected Medicaid beneficiaries, who are prescribed pain relievers at higher rates than those with other sources of insurance.
In addition, states are responsible for regulating their respective health insurance industries. This includes oversight regarding formulary standards operated by state Medicaid agencies, managed care plans, and PBMs; in the case of prescription opioids this relates to the status of such products and non-opioid treatment alternatives in the formulary.
Medicaid is limited in its ability to remove prescription opioids from state agency formularies or managed care plans in partnership with PBMs, as the program is subject to federal rebate agreements with pharmaceutical manufacturers that require almost all FDA-approved products are covered by Medicaid. However, Medicaid still has considerable leeway regarding the use of formulary management tools, such as prior authorization, quantity limits, and step therapy (requiring patients to first fail a preferred medication before switching to a non-preferred treatment).
However, as a prescription opioid crisis unfolded and in many cases was known to state authorities, state payers working with PBMs provided unfettered access to many prescription opioids, which may have fueled the existence of pill mills . Until recently, many states had relatively weak policies covering certain immediate-release prescription opioids. Additionally, most Medicaid programs offered limited coverage of non-opioid treatment alternatives. Complicating matters is the fact that Medicaid coverage of opioid use disorders was generally unclear.
All of this raises the question of why regulators at the federal and state levels didn’t respond more quickly to problems identified as far back as 2002 in the prescription opioid supply chain, such as diversion. The most common form of diversion is the transfer of opioids from patients who have received legitimately prescribed opioids to family members, friends, or others who are trying to self-medicate, acquire, or sell on the black market.
Going back to Barron’s story, payers and PBMs had plenty of opportunities since the early 2000s to at least try to reduce opioid prescribing by placing stricter restrictions on OxyContin, such as prior authorization to ensure that the drug was properly described. But they failed to do so in time. As a result, they enabled easier patient access than was warranted.