Pharmacists are sworn to secrecy about something you may find disconcerting telling you about a cheaper way to pay for a drug. Gag clauses and contracts with drug benefit managers bar pharmacists from volunteering. The fact that for many cheap generic medicines, co pays sometimes are more expensive than patients simply paying out of pocket and bypassing insurance. So where does the extra money go to? The benefit companies? The so called clawbacks may boost profits by hundreds of millions
of dollars for benefit companies. They've also led to at least sixteen lawsuits ince October, joining us as Bloomberg News farmer reporter Jared Hopkins who wrote about these contracts, Jared, you write that clawbacks can be as little as two dollars of prescription or as much as thirty Explain what a benefit manager does and how this works. Sure, thanks for having me on UM. So benefit managers are obscure
but influential middlemen UM. Some of the most well known ones are Customers might know express Scripts, which is not accused in the lawsuits, but there's also Humana and optimr X, which are SIGNA also uses optimr x, but what these are there, they process prescriptions for insurers and large employers that backed their own plans um and they determine which drugs get covered by insurance plans um. So they also negotiate uh lower drug prices on behalf of those entities,
and that's what they're designed to do. UM. The flip side of that, though, is um they set or they help set, what a copay is. And so if you go into your drug store and you pay let's say twenty dollars UM, it turns out that the cost of
the drug actually might be fifteen dollars. But and then what's happening or according to these lawsuits and according to other pharmacists we've spoken to, is that the PBM, the pharmacy benefit manager, is clawing back that remaining money, which in that case would be say five dollars, and they're holding onto that. And so that's what these lawsuits are over, which are alleging that that you can't that these PBMs
can't do this. How is it that none of the other insurers who work on this said, Hey, I've got a way of making stuff cheaper, and I can get companies or people to come and be part of my prescription plan by getting rid of the club back. So
it's a good question. Um, so they're these agreements, These contracts that pharmacists have with PBMs generally are restrictive and they have these so called gag clauses where pharmacists are not allowed to inform their customers about that they can potentially get their medication cheaper by paying for cash or by going on to another plan or you know, finding some sort of sort of alternative way. So now lawsuits have been filed against United Health Groups, SIGNA and Humana.
What are the legal accusations, So there's, uh, yeah, that's a good question. There's one is there's racketeering. Is collectively we've got racketeering as as an uh an accusation, violation of contract, breach of contract, and then also violation of the Ariska laws, which are basically laws that govern private insurance plans. And so those those kind of what what
together the lawsuits are accusing of. You know, you think of racketeering and you think of the mafia or something like that, but in fact, it's really a fraud statute that says, you know, if you have organized effort to commit fraud, essentially you can end up with the racketeering LASSUS and this does feel a bit like it might be an organized fraud, doesn't it. Well, there's there's a lot of secrecy that goes into UH and that and
negotiations that involve healthcare negotiations with with UH PBMs. UH, there's a rebate that's negotiated with drug companies. But a lot of this stuff is is not public and so there so we don't really know reading that goes into into these sorts of things. Are some states responding to this?
So a lot of these lawsuits did actually grow out of a TV station that had gone an investigation into this UH down in New Orleans, and so Louisiana is one state in Arkansas that has taken some action UH to allow pharmacists to inform their customers that there are alternatives to to get drugs a cheaper way, basically UH bypassing or trumping UM no no pun attended there UH
the contracts themselves. But but you should mention that, you know, with with everything that's going on with drug pricing, these PBMs have been getting a lot more attention lately, in particular President Trum talking about UM drug pricing and being drug prices being too high. So we may hear a
lot more about this, This may come out more. Well, you know the trade Association for Pharmacy Benefit Managers, Uh, you know memo recently was leaked from them expressing concerns about what President Trump might uh do in response to them and in their role in the drug pricing industry. So so it's not just drug makers, Uh, there's other entities here that are involved in healthcare and a lot of customers, a lot of businesses too, don't aren't familiar
with pharmacy benefit managers. That's it sounds like a European soccer league. It was a revelation to me. I have to say your story, Um, that was It was great though, and it's on the Bloomberg terminal if you want to read it. And thanks so much to Farmer Bloomberg News farmer reporter Jared Hopkins for being with us here on Bloomberg Law. Coming up, we're going to be talking about what's been happening with the investigation into Trump campaign officials
contact with Russian intelligence agencies. There are more questions every day