In 2012, Loretta Boesing received a mail-order shipment of her then-toddler aged son’s immunosuppressant medication, which he takes every 12 hours to prevent his body from rejecting his liver transplant. The medication, which arrived on a 102-degree day, had been shipped in a plastic envelope. Soon after taking the medicine, her son’s body began to reject his liver, leading to a terrifying two-week hospital stay. Boesing transferred his prescription to the hospital pharmacy to avoid similar issues in the future.
But years later, in 2018, after changing insurance, the family was forced to switch back to a mail-order pharmacy — over Boesing’s protests. The medication again arrived on a warm day without an ice pack; soon after, she said, her son’s labs started elevating, suggesting his body was once again rejecting the transplant. As she fought for a better option, Boesing learned that the mailing of medications is largely unregulated.
Boesing discovered that a key player in the health care landscape was to blame for her forced switch to mail-order drugs: pharmacy benefit managers, or PBMs. PBMs operate as middlemen in the health care space, managing the pharmacy benefits that an insurer offers its patients. In Boesing’s case, her insurer’s PBM, CVS Caremark, required patients to use its own mail-order pharmacy for specialty drugs, or medications that treat rare, complex and chronic conditions. Boesing began the “eye-opening experience” of discovering the many ways PBMs make medication more expensive and harder to access, while operating in near secrecy.
“Lives are on the line. Lives are being risked,” she told Truthout. “There’s so much patient harm, and no one’s doing anything to stop it.”
Boesing created a nonprofit, Unite for Safe Medications, which advocates for pharmaceutical safety and educates politicians, regulators and the public about how pharmacy benefit managers increase patient costs, overrule doctors’ prescription decisions, squeeze independent pharmacies out of the market, and rake in billions of dollars in the process. PBMs have become more powerful in recent years: The three largest now process about 80 percent of all prescriptions. And since 2018, all three merged with major health insurers, creating vertically integrated mega-companies with increasing revenue and control over people’s health care.
“Sadly, there is no shortage of awful patient stories,” said Boesing. “When I first started, it was just overwhelming … I didn’t know so many people were having similar situations that I was — and some even worse.”
In part prompted by advocacy from people like Boesing, in recent years and months, Congress, the Federal Trade Commission (FTC) and various state attorneys general have begun waging a relatively bipartisan attack on PBMs.
What Do Pharmacy Benefit Managers Actually Do?
PBMs, which have been around since the late 1950s, claim to bring down drug prices, saving everyone money. But in reality, their role is complicated and often opaque.
While health insurers (including insurance companies, large employers and governments) directly oversee their plans’ “medical benefits,” such as doctor and hospital visits, they outsource the management of prescriptions to PBMs. In this role, PBMs create a list of drugs available under a given insurance plan, called a “formulary.” They also negotiate with drug manufacturers to set “rebates,” which are discounts calculated as a percent of the drug’s sticker price. PBMs collect these rebates from the manufacturer, passing most on to the health insurer, while keeping a cut; PBMs claim they keep about 10 percent.
On top of these rebates, PBMs rake in other unregulated fees and costs from pharmaceutical companies in exchange for favoring their drugs in the formulary. In some cases, these fees are paid to opaque subsidiaries of PBMs called “rebate aggregators,” which manage some price negotiations. The public got a glance at PBMs’ secret fees in 2017, when Express Scripts (one of the three big PBMs) sued a pharmaceutical company over unpaid invoices. In its court filings, Express Scripts revealed that it had billed over 13 times more in “administrative fees” from the pharma company than in official formulary rebates.
PBMs say their rebate system drives down drug costs. But health care advocates argue patients are the real losers. PBMs push drug manufacturers to set exorbitant sticker prices, offering spots on the formulary to those with the most profitable rebates. The resulting sky-high sticker prices lead to significantly higher patient copays. (Shockingly, while patient copays for doctor and hospital visits are calculated based on the discounted price negotiated by the patient’s insurance company, copays for prescriptions are often based on the drug’s full sticker price.) High drug prices also drive up insurance premiums, even for those without prescription medications.
PBMs often limit patients’ ability to buy cheaper generic drugs, instead prioritizing name-brand drugs on the formulary, in order to maximize their own rebates. They have also been found to routinely charge insurers far above retail price for drugs. For instance, The New York Times found that CVS Caremark charges inflated drug prices to SilverScript Choice, a popular Medicare drug plan covering nearly 3 million people. According to the Times, the generic blood cancer drug Imatinib can retail for under $50 at some online pharmacies without insurance. But Caremark charges Medicare $2,000 a month for that very same drug. Because of Caremark’s extreme markup, patients on the Medicare plan end up paying a $664 copay for the $50 drug.
Roadblocks to Medication Can Be a Life-or-Death Matter
As Boesing’s case shows, PBMs don’t just inflate drug costs, they also complicate the process of getting medication — and can require patients to use their own (often mail-order) pharmacies.
Jeff Behm described the torturous, circuitous phone tree hell he endures every six months in order to get his prescribed injectable medication for osteoporosis from Express Scripts, the PBM his insurance uses. “It typically takes me six, seven phone calls back and forth in order to get the medication,” he told Truthout. “Many times, I’m told one thing on the first call and then another thing on the second call.” He constantly has to chase down multiple prior authorizations before the prescription is filled.
“I worked in the corporate world for 40 years, and no company that I’ve worked for would have a process like this in place,” he said. “I’m retired. I have time to deal with these things. But I could just imagine somebody who’s working two jobs, has a couple kids and can’t get their medication. And it’s like, my god, how? I don’t know how anybody can put up with this.”
Mary Walters’s 17-year-old daughter was diagnosed with an incurable chronic illness when she was 4. For many years, obtaining her daughter’s medication, a biologic that must be injected, was relatively straightforward: The prescription was filled at the pharmacy of the hospital where Walters works and her daughter was treated. Her daughter needs the shots, which retail at $27,000, every four to eight weeks, depending on her symptoms.
But around 2018, the family switched to Walters’s husband’s insurance, whose PBM, Express Scripts, requires them to use its own mail-order pharmacy. Since switching, Walters told Truthout she is constantly charged high amounts for the drug, even after meeting the plan’s deductible. When she tries to get her bills fixed, her experience mirrors Behm’s. “It’s no less than an hour to get somebody, then it’s no less than three hours to try to get somewhere. And then you never get anywhere.” On occasion, she takes an entire day off work, just to spend it on the phone with the PBM.
“A lot of people don’t have the energy to fight this,” she said. “They’ll just pay it. They’ll go into financial hardship because of it.… It’s been five years of this incompetence and headaches. I can’t even call them anymore and listen to their prompts without having heart palpitations.” Once, when she checked on a scheduled delivery, a customer service agent told her, “It’s a no-go.” The medication had not made it on the truck.
When Walters joined a Facebook group of patients opposed to PBMs, every horror story sounded familiar. Reading them, she said, “I want to say, ‘I’m sorry, you’re not going to get anywhere. I’m sorry.’”
“They’re bullying the families by forcing them to go to specific pharmacies,” she said. “That way they control where the money’s going. But then, at the same time, they’re not able to train their employees to actually work the process well.” Walters says that as her daughter gets older and the disease gets worse, she gets sicker — which makes it even harder for Walters to deal with the middlemen interfering with her treatment. “I have less energy to do this, because I’m trying to take care of my kid.”
Those most affected by PBM policies tend to have serious or complex conditions that require specialty pharmacies, such as cancers, autoimmune conditions, psoriasis, multiple sclerosis and neurological conditions.
The Community Oncology Alliance, a nonprofit that advocates for oncology patients and practices, collects and publishes heartbreaking “PBM Horror Stories.” They tell stories of patients missing their narrow window of possible cancer recovery due to pharmacy delays, of people going weeks without life-saving medications as their doctors battle the PBM for approval, and of children with hemophilia unable to receive urgent blood clotting injections because they aren’t allowed to use the local pharmacy.
“It’s bad,” said Walters, “and it eventually, at some level, will be killing people.”
She’s right. In January, 22-year-old Cole Schmidtknecht died of an asthma attack. Days earlier, he had tried to fill his Advair prescription, only to leave without it when he learned the price had increased from $5 to $539. His grieving parents, who now advocate for reform, later learned that their PBM, OptumRx, had moved Advair to a different tier in their plan.
Patients Pay the Price for PBM Profits
Robert Levin, M.D., a rheumatologist whose patients have complex autoimmune diseases like rheumatoid arthritis and lupus, is the president of the Alliance for Transparent and Affordable Prescriptions, a coalition of 25 member organizations advocating for PBM reform.
He said the last 25 years have been an exciting time for rheumatology, with revolutionary discoveries that can offer patients life-changing treatments. But in 2015 or 2016, he said, “what we noticed was that we were having more and more difficulty getting the treatments that we thought were appropriate for our patients. We were starting to see denials of what we were prescribing.” In addition, “we saw out-of-pocket costs where the patients just couldn’t afford their medication, even if we got it approved.”
“It’s so easy to put blame on the pharmaceutical manufacturers,” said Levin. “And I’m not a shill for the pharmaceutical industry. They have their own issues. But really, I think the PBMs are the big obstacle in terms of our patients getting access to care.”
Like many doctors, Levin likes to work with patients to choose a treatment plan that suits their lifestyle, needs, other medications, and health conditions. But because of the PBM’s formularies of preferred medications, “most of that decision making, especially when it’s the first drug, is totally taken out of our hands,” he said. In his opinion, a drug formulary “has nothing to do with safety, it has nothing to do with effectiveness, it has nothing to do with anything other than which ones are most profitable.” Often, patients are required to try and fail on preferred drugs, before getting coverage on other medications, a policy so widespread that it has a name: step therapy. Doctors often call it “fail first.”
“We deal with fail first almost every day,” Miriam J. Atkins, an oncologist, testified in a congressional hearing last year. When she prescribes the anti-nausea medication that best matches a particular chemotherapy treatment, she explained, the PBM often requires the patient to try a different anti-nausea medication. “And if the patient fails that by getting really, really sick, then I can go back to the drug I want to use.” Citing another example, she explained that she had prescribed a medication called a CDK4/6 inhibitor to a patient with Stage 4 breast cancer. The PBM intervened and said the patient would have to fail on a different, preferred CDK4/6 inhibitor first. But what Atkins knew — and the PBM apparently didn’t — was that national guidelines instruct doctors not to try a second CDK4/6 inhibitor if the first one fails. She explained: “So, they are getting in the way of me taking care of my patient, also trying to treat a patient without a license, and trying to treat that patient in the wrong manner.”
“They’re pros at extracting money out of the system and keeping it,” Levin said. “And what about our patients? What about premium payers? What does the government get back in return? My answer is: not much.”
Like doctors, many pharmacists are rallying against PBMs. When PBMs force patients to use their own vertically integrated pharmacies, it pushes local pharmacies across the country out of business. When patients do use outside pharmacies, PBMs often reimburse the pharmacies less than the cost of a drug, keeping the difference, a practice called spread pricing. They also charge pharmacies various unpredictable fees on Medicare transactions, called direct and indirect remuneration fees.
More than 300 independent pharmacies closed in 2023, creating pharmacy deserts in rural communities.
PBMs have become key pieces of mega-health care companies that control the market from top to bottom. The three largest PBMs are each connected to a major health insurer. The largest, CVS Caremark, is owned by CVS Health, which also owns Aetna and is number six on the Fortune 500 list. In 2023, CVS Health expanded into yet another health care space, creating a subsidiary that manufactures drugs. The second-largest PBM, Express Scripts, is owned by Cigna Group (number 16 on the Fortune 500). The third, OptumRx, is owned by UnitedHealth Group, which is number four on the Fortune 500 list, and is the nation’s largest private health insurer and the largest employer of physicians.
“They’re insurance companies, they’re employers of physicians, they’re owners of hospitals, they have their own specialty pharmacies, they have their own brick-and-mortar pharmacies, they have their own mail-order pharmacies — which patients have been forced to use over independent pharmacies,” said Levin, describing the vertical integration of mega-health care companies.
“You’ve got all of these rampant conflicts of interest, which are effectively putting patients at risk,” said Warris Bokhari, M.D., a doctor and patient advocate. “You end up with a system where the patient maybe has no true advocate, because everybody’s basically on the side of billing as much as possible.”
A Growing Movement Against PBMs
Regulation of PBMs is tricky: Some insurance plans are overseen at the federal level and others at 50 different state levels, creating a patchwork of protections. And the complex, secretive industry is hard to regulate.
“There’s a whole total morass of different terms and things that they create, so that they can obfuscate and hide where the money goes,” said Levin. “It’s a kind of a shell game.” While the rebates are somewhat disclosed, he said other fees are harder to track, sometimes going to offshore entities. “Needless to say, they have figured out the system, and it keeps morphing as different rules and regulations come out.”
What’s more, he said, “they have almost unlimited funds to lobby.… They have amazing control over what happens, and what gets killed, and what can pass.”
Despite the challenges, interest in reform is evident: All 50 states have passed some form of PBM regulation legislation since 2016. But many state reforms are stymied by a 1974 federal law, the Employee Retirement Income Security Act (ERISA), which sets standards for employer-sponsored health plans. This came to a head in 2019, when Oklahoma enacted aggressive PBM reforms that sought to prevent PBMs from directing business to their own pharmacies and driving smaller pharmacies out of business. But a trade association representing PBMs sued, and in 2023, a U.S. Court of Appeals ruled that because ERISA plans are overseen at the federal level, Oklahoma’s regulations could not apply to self-funded insurance plans — which make up about two-thirds of employer-sponsored plans. Oklahoma has appealed to the U.S. Supreme Court; 32 state attorneys general and five pharmacist trade groups have joined the suit.
Momentum is growing for PBM regulation. In 2022, the FTC launched an investigation into PBMs’ role in drug pricing. This July, it released a scathing interim report, calling PBMs middlemen who “profit at the expense of patients by inflating drug costs and squeezing Main Street pharmacies.” The FTC plans to sue the big three PBMs.
Several state attorneys general have also sued PBMs, including Vermont, Hawaii, California, Ohio and Kentucky. In February, 39 state attorneys general signed a letter urging Congress to reform PBM practices.
In 2018, Congress banned “gag orders” that forbade pharmacists from telling customers that it would be cheaper to buy their medication outright than to pay with their insurance plan. A variety of reform acts were introduced and advanced in Congress in 2023, including one that passed the House, suggesting the bipartisan votes are there, if reform is made a priority. In House Oversight Committee hearings in July, Republicans and Democrats alike aggressively questioned executives from the three largest PBMs about medication denials and sky-high drug prices.
Speaking in monotone and repeating generic responses, the executives refused to directly answer many questions or commit to making specific changes. “It’s like lawyers are writing your statements,” Rep. Ro Khanna (D-California) said, in obvious frustration, when the CEO of OptumRx sidestepped his questions about his company denying a 10-year-old’s arthritis medication. In August, committee Chairman James Comer (R-Kentucky) accused all three executives of specific lies in their testimony, reminding them of the penalties for perjury.
There are several avenues for congressional reform: increasing transparency requirements; banning “spread pricing” (when PBMs pay pharmacies less than what they are paid for a drug); tying patient copays to the negotiated price, not the drug’s sticker price; requiring some of the rebate to be “passed through” to the patient in the form of a lower copay; and “delinking” (in which payments from drug manufacturers to PBMs would be a flat fee, instead of a percentage of drug cost).
Levin said delinking “basically busts the whole system.” When multiple drug companies offer competing versions of a drug, he said, that competition should incentivize them to lower prices. Instead, they are currently incentivized to raise the list price, since PBMs prioritize drugs that provide the largest percentage-based rebates. The Congressional Budget Office determined that delinking would save the federal government $226 million over the 2024-2034 period; however, it also noted that additional transparency rules would be needed to prevent PBMs from sidestepping delinking policies.
“There’s a lot of momentum,” said Boesing, although she noted that many people still have no idea that PBMs exist. “There’s so much going on — between drug prices, and pharmacy access, and medication access issues.… It’s creating this major call for action.… The pharmacists and the physicians are starting to get louder. But it’s really those community members, and the patients, and caregivers that need to be right beside them.”
Truthout Is Preparing to Meet Trump’s Agenda With Resistance at Every Turn
Dear Truthout Community,
If you feel rage, despondency, confusion and deep fear today, you are not alone. We’re feeling it too. We are heartsick. Facing down Trump’s fascist agenda, we are desperately worried about the most vulnerable people among us, including our loved ones and everyone in the Truthout community, and our minds are racing a million miles a minute to try to map out all that needs to be done.
We must give ourselves space to grieve and feel our fear, feel our rage, and keep in the forefront of our mind the stark truth that millions of real human lives are on the line. And simultaneously, we’ve got to get to work, take stock of our resources, and prepare to throw ourselves full force into the movement.
Journalism is a linchpin of that movement. Even as we are reeling, we’re summoning up all the energy we can to face down what’s coming, because we know that one of the sharpest weapons against fascism is publishing the truth.
There are many terrifying planks to the Trump agenda, and we plan to devote ourselves to reporting thoroughly on each one and, crucially, covering the movements resisting them. We also recognize that Trump is a dire threat to journalism itself, and that we must take this seriously from the outset.
After the election, the four of us sat down to have some hard but necessary conversations about Truthout under a Trump presidency. How would we defend our publication from an avalanche of far right lawsuits that seek to bankrupt us? How would we keep our reporters safe if they need to cover outbreaks of political violence, or if they are targeted by authorities? How will we urgently produce the practical analysis, tools and movement coverage that you need right now — breaking through our normal routines to meet a terrifying moment in ways that best serve you?
It will be a tough, scary four years to produce social justice-driven journalism. We need to deliver news, strategy, liberatory ideas, tools and movement-sparking solutions with a force that we never have had to before. And at the same time, we desperately need to protect our ability to do so.
We know this is such a painful moment and donations may understandably be the last thing on your mind. But we must ask for your support, which is needed in a new and urgent way.
We promise we will kick into an even higher gear to give you truthful news that cuts against the disinformation and vitriol and hate and violence. We promise to publish analyses that will serve the needs of the movements we all rely on to survive the next four years, and even build for the future. We promise to be responsive, to recognize you as members of our community with a vital stake and voice in this work.
Please dig deep if you can, but a donation of any amount will be a truly meaningful and tangible action in this cataclysmic historical moment.
We’re with you. Let’s do all we can to move forward together.
With love, rage, and solidarity,
Maya, Negin, Saima, and Ziggy