Millions of U.S. service members and veterans are among a group that some say is being ill-served by one of the three huge pharmacy middlemen that dominate America’s drug marketplace.
Patients, providers and pharmacists across the country complain that those middlemen, known as pharmacy benefit managers, have used their market dominance to drive up prices and drive out competition and force patients into the PBMs’ own — some contend inferior — mail-order pharmacies.
In Ohio, PBMs have been accused of overbilling taxpayers, anti-competitive practices and interfering with cancer patients’ access to medication. Now, similar complaints are surfacing about the exclusive contract that one of them, Express Scripts, has with Tricare, the program that provides health care to active-duty military and to veterans.
Since 2009, Express Scripts has held the exclusive right to serve as pharmacy benefit manager to 9.5 million active-duty troops and veterans as well as their dependents, who together received $7.7 billion worth of drugs in 2018, according to statistics from the Defense Health Agency, which runs Tricare. That contract makes the program one of the biggest clients of St. Louis-based Express Scripts, the nation’s largest pharmacy benefit manager.
As pharmacy benefit manager, Express Scripts determines reimbursements to retail pharmacies that fill Tricare patients’ prescriptions and bills the government for them. It also administers transactions involving government-purchased medicines at military bases and through Express Scripts’ own mail-order pharmacy.
In 2011, the program started favoring Express Scripts’ mail-order pharmacy over its retail competitors by eliminating copayments for generic drugs from the PBM.
‘It’s like they’re penalizing us’
Now, because the government-purchased brand-name drugs enjoy manufacturer rebates that those dispensed by retail pharmacies don’t, the program requires participants to get most of those more expensive drugs exclusively through Express Scripts’ mail-order pharmacies or at military facilities.
The system favors Express Scripts at the expense of customer service, said Linda Talley, who lives in Rineyville, Kentucky, near Fort Knox, where her husband retired after a 29-year Army career. She described her sacrifices as his career took her to California and Germany, how she stayed in North Carolina while he was deployed to Korea and how she stayed in California while he was on an island in the middle of the Pacific.
“I served, too,” she said.
But Talley, 60, said Express Scripts doesn’t do much to serve her. To get most brand-name drugs or less-expensive generics, she has to either obtain them through Express Scripts’ mail-order pharmacy — which Talley said often takes two weeks — or she can drive 10 miles to a military-run pharmacy at Fort Knox, where “sometimes you can wait hours.”
Recently, Talley was planning a two-month trip and asked the Express Scripts mail-order pharmacy to overnight her a 90-day supply of a new medication. Talley declined to say what malady it was for, but said, “If I don’t have my medication, that could cause a lot of harm.”
No dice, Express Scripts said. The company couldn’t fill the prescription that quickly, and even if she paid the higher copay at a retail pharmacy, “they can only fill it for 30 days at a time” because that’s all Express Scripts would reimburse the pharmacy for, Talley said.
“I know a lot of retired military people who are a little bit fed up with how things work,” she said. “They think it would be nice if they could just walk into a local pharmacy and get the same price. It’s like they’re penalizing us because we were in the Army and we’re retired.”
Talley said she would much rather buy her drugs at one of Gary Hamm’s Apothecare pharmacies in the area, where she can get her medicine quickly and because “he knows my name, my history and the medicines I’m on.” But Ronna Hauser, vice president of the National Community Pharmacists Association, said even when they can provide the drugs, retail pharmacies are at a strong disadvantage because of Express Scripts’ exclusive rebates.
“There’s this big incentive to move all of these people to Express Scripts mail order or to military treatment facilities,” she said. Making rebates available to pharmacy retailers “is doable. You could have a charge-back system in retail where you purchase the drug and then you do a charge-back to get down to the amount that Express Scripts purchased it for.”
Express Scripts spokesman Brian Henry deferred many questions for this story to the Defense Health Agency. Kevin Dwyer, spokesman for the agency, said taxpayers have saved $130 million annually since 2015, when the National Defense Authorization Act required Tricare patients to get brand-name maintenance medications at Express Scripts home-delivery pharmacies or at military health facilities.
Asked why his agency couldn’t achieve similar savings by making the same rebates available to retailers, he said Tricare “utilizes government-contracted medications at both the home-delivery and military pharmacies that are negotiated for by the Department of Veterans Affairs and the DoD for specific use by the government. The government does not purchase the drugs dispensed in retail network pharmacies, rather retail pharmacies purchase their own drugs through their own supply chains and negotiate prices on their own behalf.”
Last year, U.S. Sen. Sherrod Brown, D-Ohio, joined a bipartisan group of 23 senators calling on the undersecretary of defense to find a way to “restore beneficiaries’ access to community pharmacies, regardless of whether their needed medication(s) are brand or generic manufactured.” So far, however, that hasn’t happened.
Life and death
The Tricare-Express Scripts arrangement also has come under heavy fire from the people who care for some of the sickest military personnel — cancer patients.
In May, The Dispatch reported the case of Charlotte Ortiz, a 39-year-old Ohio Air National Guard recruiter living in Springfield who had developed a rare, aggressive cancer. The cancer was so rare that there was no FDA-approved drug to treat it. But Express Scripts disallowed any “off-label” use — meaning that it wouldn’t pay for the $11,000-per-month drug her nationally renowned doctors said she needed. That triggered appeals that Express Scripts could take up to 90 days to consider, a period during which all of Ortiz’s other treatments could be delayed as well.
Brown intervened to speed up the process, and more than a month after her doctors prescribed the drug, Express Scripts agreed to pay for it. Ortiz had been getting the medicine through manufacturer donations before that. She died last month.
Oncology clinics around the country report other problems with the Tricare-Express Scripts deal. For one, they say Express Scripts often reimburses clinic-based pharmacies for expensive cancer drugs at far below their cost, forcing the clinic to decline to fill prescriptions.
“I have heard from almost every practice about how all of these drugs are underwater,” said Ted Okon, executive director of the Community Oncology Alliance. “This is a big, serious problem.”
Cancer clinics stress the importance of their pharmacies in the continuum of care. Dosages of expensive cancer medications can be complicated, and doctors can make frequent adjustments. So it makes sense to house the doctors and the pharmacy in the same building, they say. Meanwhile, mail-order specialty pharmacies are prone to delays and other mistakes that can endanger lives, they add.
But Express Scripts reimbursements are disrupting that continuum for Tricare patients, said Nina Chavez, chief operating officer of the New Mexico Cancer Center in Albuquerque.
“We’ve started losing money on every script we’re filling for Tricare,” she said, explaining that even with the prescriptions her clinics can’t fill, doctors and pharmacists there are still helping patients deal with the complexities of their medications. “We’re doing all the work, and (Express Scripts) is getting all the money.”
Lisa Day, a pharmacist with Ventura County Hematology-Oncology Specialists in California, listed a host of problems: Express Scripts reimbursements for a single cancer drug coming in at more than $1,000 under cost, Tricare patients using the company’s mail-order pharmacy and having drugs stolen off their porch, and an elderly patient with dementia struggling to manage his wife’s drugs over the phone.
“I’ve seen so much go down and seen so many of my patients lose hope and just drop out,” she said.
Henry, the Express Scripts spokesman, said his company isn’t biased against cancer clinics; it’s the other way around.
“We reimburse pharmacies and clinics fairly for the work they do and disagree with any inference to the contrary,” he said in an email. “Some oncology clinics do have a bias against pharmacy benefit managers, like Express Scripts, as our goal is to provide the most cost-effective care versus dispensing medications at extremely high markups.”
Dwyer, of the Defense Health Agency, noted that Tricare patients can get cancer drugs through Express Scripts mail-order, at military facilities and at large-chain pharmacies: Kroger, Walgreens, Rite Aid and Walmart.
“Our patients are the central focus of all Military Health System pharmacy decisions, and Tricare beneficiaries may receive specialty (including cancer) medications through all three points of service when available,” he said.
Henry said cancer clinics’ markups are high compared to those of Express Scripts’ mail-order pharmacy. But as a general matter, you have to take the big pharmacy benefit managers’ word for it when they say what a drug should cost. State Medicaid systems in Ohio and around the country are trying to figure out ways to make the system more transparent, with varying degrees of success.
Hamm, whose Fort Knox-area pharmacies Linda Talley wants to use, said Express Scripts and the other two massive PBMs — CVS Caremark and OptumRx — have been providing low-ball reimbursements based on secret price lists. And for the past eight years, Tricare has taken steps to drive its beneficiaries out of his pharmacies altogether.
“It’s just a challenge, and it just took another chunk of business away from us,” he said.
Charles Gallagher, a retired naval officer living on the Mississippi Gulf Coast, is one of those guys who pores over his monthly explanations of benefits — not because the money is coming out of his pocket, but because he’s trying to protect the taxpayer. He noticed that Express Scripts has billed Tricare for omeprazole, a generic heartburn medication, for a 90-day supply at rates ranging from $8.51 to $666 since 2017.
He’s been writing to anyone he can think of looking for an explanation. Henry, of Express Scripts, said he can’t comment without seeing Gallagher’s explanation of benefits.
Gallagher said he thinks he knows what the game is: “I’m absolutely sure they’re taking advantage of us.”
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