In June, the Federal Trade Commission (FTC) announced they will be launching an inquiry into the practices of the “prescription drug middleman” industry. These middlemen, known as Pharmacy Benefit Managers (PBMs), determine if an insurer will pay for a prescription that is prescribed for a patient. Caremark, ExpressScripts and Optum are some of the familiar gatekeepers and suppliers of medications.
The FTC statement reads, “Pharmacy benefit managers are the middlemen who are hired to negotiate rebates and fees with drug manufacturers, create drug formularies and surrounding policies, and reimburse pharmacies for patients’ prescriptions. The largest pharmacy benefits managers are now vertically integrated with the largest health insurance companies and wholly owned mail order and specialty pharmacies.”
I want to discuss the role of PBMs as they relate to one aspect of every physician’s life: the requirement for physicians to obtain prior authorization (PA) before certain medications can be dispensed by the pharmacy and paid for by insurance. Initially, PAs were required only for expensive, name brand medications, but now PAs are often required for inexpensive generics. Doctors must justify why a specific medication is needed, and they may be required to prove that the patient has tried alternative medications first that either did not work or were not tolerated, in a process that makes guinea pigs of patients. Often, the patient’s doctor does not have the option of starting with the most effective medicine with the fewest side effects, and each time a dose is changed, another PA is required.
What started as a cost-control measure has become an unregulated burden on both patients and their doctors. The requests for justification can be burdensome and obscure. They can include filling out forms online, uploading records in specific formats and long waits on hold to speak with a reviewer. And the appeals process can be onerous and time-consuming, with no guarantee that the medication will be approved or that a physician in the relevant specialty will be involved in the decision.
Let me give an example from my own practice. Recently, I sent in a prescription, then was notified to start the prior authorization process online. There was a list of “acceptable” diagnoses. I checked a box and a new question appeared — it asked if I am a certified sleep medicine physician. I’m a psychiatrist, and so the PA was denied. The patient had the option of paying cash for the medication, of going without it or of making an appointment with a specialist and waiting out that process.
I looked up the prices on the GoodRx app — a company that negotiates prices outside of insurance and can be used by patients who pay cash. The medication costs just over $288 for a one-month supply at her pharmacy, CVS. Instead, I asked her to go to another pharmacy where the prescription cost $21. This is not uncommon, drug costs may vary by hundreds of dollars from one pharmacy to another, for no obvious reason.
The time physicians spend on prior authorizations (or cost hunting) is uncompensated, and it is considerable. It’s a hoop to jump through, and no one is overseeing the placement of the hoops. Furthermore, when patients do use their insurance, the copay may be more than the cash price, and this information is not made readily available. Nothing about the process is transparent.
How big a problem are prior authorizations? In December of 2021, the American Medical Association conducted a survey of 1,004 practicing physicians. The average physician completes 41 PAs per week, nearly 1 in 5 of the prescriptions written. Forty percent of doctors hire staff solely to manage prior authorizations; 93% of doctors reported that PAs have caused delays in patients getting care, and 82% reported that PAs caused patients to abandon treatment. In terms of patient outcomes: 34% of doctors reported a serious adverse event, while 24% had patients who required hospitalization. Eighty-eight percent of physicians said this process is a high, or extremely high, burden.
The administrative burdens of medicine have killed the joy of practicing for so many physicians. Physicians are burning out and retiring earlier, and patients are frustrated with the high cost and unnecessary complications associated with getting care. The prior authorization process is a huge contributor to all that is wrong with the system. I hope that the FTC will take a long hard look at the burdens, confusion and cost shifting — rather than saving, that this burdensome process inflicts on the medical system.
Dinah Miller (firstname.lastname@example.org) is a psychiatrist in Baltimore City.