WEBVTT - Pharmacists Gagged from Saving Customers Money (Audio)

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<v Speaker 1>Pharmacists are sworn to secrecy about something you may find

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<v Speaker 1>disconcerting telling you about a cheaper way to pay for

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<v Speaker 1>a drug. Gag clauses and contracts with drug benefit managers

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<v Speaker 1>bar pharmacists from volunteering. The fact that for many cheap

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<v Speaker 1>generic medicines, co pays sometimes are more expensive than patients

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<v Speaker 1>simply paying out of pocket and bypassing insurance. So where

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<v Speaker 1>does the extra money go to? The benefit companies? The

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<v Speaker 1>so called clawbacks may boost profits by hundreds of millions

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<v Speaker 1>of dollars for benefit companies. They've also led to at

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<v Speaker 1>least sixteen lawsuits ince October, joining us as Bloomberg News

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<v Speaker 1>farmer reporter Jared Hopkins who wrote about these contracts, Jared,

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<v Speaker 1>you write that clawbacks can be as little as two

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<v Speaker 1>dollars of prescription or as much as thirty Explain what

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<v Speaker 1>a benefit manager does and how this works. Sure, thanks

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<v Speaker 1>for having me on UM. So benefit managers are obscure

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<v Speaker 1>but influential middlemen UM. Some of the most well known

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<v Speaker 1>ones are Customers might know express Scripts, which is not

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<v Speaker 1>accused in the lawsuits, but there's also Humana and optimr X,

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<v Speaker 1>which are SIGNA also uses optimr x, but what these

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<v Speaker 1>are there, they process prescriptions for insurers and large employers

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<v Speaker 1>that backed their own plans um and they determine which

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<v Speaker 1>drugs get covered by insurance plans um. So they also

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<v Speaker 1>negotiate uh lower drug prices on behalf of those entities,

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<v Speaker 1>and that's what they're designed to do. UM. The flip

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<v Speaker 1>side of that, though, is um they set or they

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<v Speaker 1>help set, what a copay is. And so if you

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<v Speaker 1>go into your drug store and you pay let's say

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<v Speaker 1>twenty dollars UM, it turns out that the cost of

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<v Speaker 1>the drug actually might be fifteen dollars. But and then

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<v Speaker 1>what's happening or according to these lawsuits and according to

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<v Speaker 1>other pharmacists we've spoken to, is that the PBM, the

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<v Speaker 1>pharmacy benefit manager, is clawing back that remaining money, which

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<v Speaker 1>in that case would be say five dollars, and they're

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<v Speaker 1>holding onto that. And so that's what these lawsuits are over,

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<v Speaker 1>which are alleging that that you can't that these PBMs

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<v Speaker 1>can't do this. How is it that none of the

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<v Speaker 1>other insurers who work on this said, Hey, I've got

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<v Speaker 1>a way of making stuff cheaper, and I can get

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<v Speaker 1>companies or people to come and be part of my

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<v Speaker 1>prescription plan by getting rid of the club back. So

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<v Speaker 1>it's a good question. Um, so they're these agreements, These

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<v Speaker 1>contracts that pharmacists have with PBMs generally are restrictive and

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<v Speaker 1>they have these so called gag clauses where pharmacists are

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<v Speaker 1>not allowed to inform their customers about that they can

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<v Speaker 1>potentially get their medication cheaper by paying for cash or

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<v Speaker 1>by going on to another plan or you know, finding

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<v Speaker 1>some sort of sort of alternative way. So now lawsuits

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<v Speaker 1>have been filed against United Health Groups, SIGNA and Humana.

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<v Speaker 1>What are the legal accusations, So there's, uh, yeah, that's

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<v Speaker 1>a good question. There's one is there's racketeering. Is collectively

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<v Speaker 1>we've got racketeering as as an uh an accusation, violation

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<v Speaker 1>of contract, breach of contract, and then also violation of

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<v Speaker 1>the Ariska laws, which are basically laws that govern private

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<v Speaker 1>insurance plans. And so those those kind of what what

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<v Speaker 1>together the lawsuits are accusing of. You know, you think

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<v Speaker 1>of racketeering and you think of the mafia or something

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<v Speaker 1>like that, but in fact, it's really a fraud statute

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<v Speaker 1>that says, you know, if you have organized effort to

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<v Speaker 1>commit fraud, essentially you can end up with the racketeering

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<v Speaker 1>LASSUS and this does feel a bit like it might

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<v Speaker 1>be an organized fraud, doesn't it. Well, there's there's a

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<v Speaker 1>lot of secrecy that goes into UH and that and

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<v Speaker 1>negotiations that involve healthcare negotiations with with UH PBMs. UH,

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<v Speaker 1>there's a rebate that's negotiated with drug companies. But a

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<v Speaker 1>lot of this stuff is is not public and so

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<v Speaker 1>there so we don't really know reading that goes into

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<v Speaker 1>into these sorts of things. Are some states responding to this?

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<v Speaker 1>So a lot of these lawsuits did actually grow out

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<v Speaker 1>of a TV station that had gone an investigation into

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<v Speaker 1>this UH down in New Orleans, and so Louisiana is

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<v Speaker 1>one state in Arkansas that has taken some action UH

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<v Speaker 1>to allow pharmacists to inform their customers that there are

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<v Speaker 1>alternatives to to get drugs a cheaper way, basically UH

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<v Speaker 1>bypassing or trumping UM no no pun attended there UH

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<v Speaker 1>the contracts themselves. But but you should mention that, you know,

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<v Speaker 1>with with everything that's going on with drug pricing, these

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<v Speaker 1>PBMs have been getting a lot more attention lately, in

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<v Speaker 1>particular President Trum talking about UM drug pricing and being

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<v Speaker 1>drug prices being too high. So we may hear a

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<v Speaker 1>lot more about this, This may come out more. Well,

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<v Speaker 1>you know the trade Association for Pharmacy Benefit Managers, Uh,

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<v Speaker 1>you know memo recently was leaked from them expressing concerns

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<v Speaker 1>about what President Trump might uh do in response to

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<v Speaker 1>them and in their role in the drug pricing industry.

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<v Speaker 1>So so it's not just drug makers, Uh, there's other

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<v Speaker 1>entities here that are involved in healthcare and a lot

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<v Speaker 1>of customers, a lot of businesses too, don't aren't familiar

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<v Speaker 1>with pharmacy benefit managers. That's it sounds like a European

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<v Speaker 1>soccer league. It was a revelation to me. I have

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<v Speaker 1>to say your story, Um, that was It was great though,

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<v Speaker 1>and it's on the Bloomberg terminal if you want to

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<v Speaker 1>read it. And thanks so much to Farmer Bloomberg News

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<v Speaker 1>farmer reporter Jared Hopkins for being with us here on

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<v Speaker 1>Bloomberg Law. Coming up, we're going to be talking about

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<v Speaker 1>what's been happening with the investigation into Trump campaign officials

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<v Speaker 1>contact with Russian intelligence agencies. There are more questions every

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<v Speaker 1>day