Pharmacy Benefit Managers Played Key Role in Worsening Opioid Crisis, Drug Makers Paid Staggering Rebates To Middlemen: NYT

Pharmacy benefit managers (PBMs) – key intermediaries in the U.S. pharmaceutical supply chain – have come under scrutiny for their role in exacerbating the opioid epidemic.

While presenting themselves as proactive in curbing opioid abuse, PBMs quietly profited from arrangements with drugmakers that undermined safeguards against overprescribing, a recent investigation by The New York Times reveals.

The three largest PBMs—UnitedHealth Group Inc. (NYSE:UNH), through its Optum unit, CVS Health Corp. (NYSE:CVS) via CVS Caremark, and Cigna Corp. (NYSE:CI) through Express Scripts oversee prescription drug access for over 200 million Americans.

Several state and local governments have filed lawsuits against drug companies and PBMs, accusing them of inflating insulin prices.

These companies negotiate drug prices on behalf of insurers and employers, often collecting rebates from manufacturers in exchange for favorable placement on insurance formularies.

However, the NYT report says that internal documents reveal that PBMs repeatedly bargained away restrictions that could have curbed opioid misuse in exchange for lucrative rebates.

For example, Purdue Pharma, the maker of OxyContin, explicitly offered rebates to PBMs to remove limits on prescribing their drugs. These deals eliminated prior authorization requirements and allowed higher prescription doses than federal guidelines suggested.

Internal communications from Purdue and PBMs celebrated these arrangements as boosting sales while ensuring favorable drug coverage.

The NYT investigation highlights that opioid manufacturers paid staggering rebates to PBMs.

Between 2003 and 2012, Purdue's annual rebates for OxyContin nearly doubled to $400 million. PBMs retained a portion of these funds while passing some to their clients, incentivizing insurers to avoid imposing prescribing restrictions.

PBMs sometimes actively worked with manufacturers to prevent insurers from introducing safeguards. The lack of restrictions directly contributed to the worsening opioid crisis, the report said.

High prescription thresholds and unrestricted access facilitated overprescribing and fueled addiction.

One 2015 study found that patients receiving doses well below the thresholds negotiated by PBMs were still at significantly increased risk of overdose and death.

Despite mounting evidence and public pressure, PBMs prioritized revenue over patient safety, according to the report. In 2017, as public outrage over the opioid epidemic grew, Express Scripts and Optum Rx delayed introducing safety measures, citing potential losses from reduced rebates.

Some executives within these companies voiced frustration over prioritizing profits over lives, highlighting the ethical conflict at play.

Although PBMs later implemented stricter opioid controls following federal and state pressures, the damage was already done.

Critics argue that these measures were motivated more by public relations concerns than a genuine commitment to ending the crisis.

According to a Bloomberg report, Trump said he plans to "knock out" PBMs, or so-called drug middlemen, from the industry.

In September, the FTC filed a complaint accusing the PBMs of creating a system that benefits them financially by prioritizing drug rebates, forcing patients to pay higher costs for life-saving insulin.

These PBMs, referred to as the Big Three, administer around 80% of prescriptions in the U.S.

However, the PBMs argue that this action seeks to upend current drug rebate contracts and disrupt long-standing practices, all while expanding the FTC's authority beyond traditional limits.

Price Action: At last check Wednesday, CI stock was up 4.34% to $277.12, CVS stock was up 2.97% to $45.35, and UNH stock was up 2.13% to $495.35.

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