Updated Apr 2, 2018

The windfalls of secrecy

Illustration: Sarah Grillo / Axios

Express Scripts met with analysts at banking giant Barclays in March and mentioned how its "industry-leading EBITDA per claim" — a measure of profit they collect on each prescription — likely will be "sustainable over time," according to Barclays' note to Wall Street. Those comments come as each of the big three pharmacy benefit managers are being attached to health insurers.

The big picture: Some PBMs use a different "transparent" model to earn money, but they are in the minority. New documents obtained by Axios peel back the curtain on the traditional drug benefits business, though many details remain hidden from public view.

Some new documents shed light on how PBMs make money, and also reveal how difficult it is to get the full picture:

  • Nashville uses Express Scripts to provide drug benefits to city employees, and its publicly available 2017 contract lays out actual financial terms — including rebates. Many of the contract's definitions are also identical to the template Axios previously published — including the brand/generic algorithm.
  • The state of Delaware amended its contract with Express Scripts a few years ago to ensure that Express Scripts guaranteed more rebates, according to a copy of the contract.
  • Axios obtained an OptumRx pharmacy benefits proposal through New Jersey's open records law. New Jersey awarded its pharmacy benefits deal to OptumRx last year. However, several sections that outline financial terms for the taxpayer-funded prescription drug deal are "exempt from public disclosure." OptumRx did not respond to questions.

What we're hearing: Many people that work in the industry are voicing disdain for the business models and lack of transparency associated with the main players.

  • West Virginia's Medicaid program kicked PBMs to the curb last year. The state uses health insurers to run Medicaid, and it said it would no longer pay insurers to contract with CVS and Express Scripts for pharmacy benefits.
  • Vicki Cunningham, West Virginia's director of pharmacy, said the PBM costs were "excessive" and "not sustainable." The state expects to save $30 million this year by acting as its own pharmacy benefit manager.
  • Arkansas passed a law requiring PBMs to be licensed through the state's insurance department.
  • Ohio lawmakers are looking into how health insurers pay PBMs and how PBMs pay pharmacies, according to the Columbus Dispatch.

Go deeper: A Bloomberg story on how PBMs book their profit, and the American Prospect on PBM antitrust concerns.

Other parts of the series:

Go deeper

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 7 p.m. ET: 855,007 — Total deaths: 42,032 — Total recoveries: 176,714.
  2. U.S.: Leads the world in confirmed cases. Total confirmed cases as of 7 p.m. ET: 186,265 — Total deaths: 3,810 — Total recoveries: 6,910.
  3. Business updates: Should you pay your rent or mortgage during the coronavirus pandemic? Find out if you are protected under the CARES Act.
  4. Public health updates: More than 400 long-term care facilities across the U.S. report patients with coronavirus — Older adults and people with underlying health conditions are more at risk, new data shows.
  5. Federal government latest: President Trump said the next two weeks would be "very painful" on Tuesday, with projections indicating the virus could kill 100,000–240,000 Americans. The White House and other institutions are observing several models to help prepare for when COVID-19 is expected to peak in the U.S.
  6. U.S.S. Theodore Roosevelt: Captain of nuclear aircraft carrier docked in Guam pleaded with the U.S. Navy for more resources after more than 100 members of his crew tested positive.
  7. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

White House projects 100,000 to 240,000 U.S. coronavirus deaths

President Trump said at a press briefing on Tuesday that the next two weeks in the U.S. will be "very painful" and that he wants "every American to be prepared for the days that lie ahead," before giving way to Deborah Birx to explain the models informing the White House's new guidance on the coronavirus.

Why it matters: It's a somber new tone from the president that comes after his medical advisers showed him data projecting that the virus could kill 100,000–240,000 Americans — even with strict social distancing guidelines in place.

Go deeperArrowUpdated 35 mins ago - Health

Paying rent in a pandemic

Illustration: Aïda Amer/Axios

For many people who've lost jobs or income because of the coronavirus pandemic, tomorrow presents a stressful decision: Do you pay your rent or mortgage?

Why it matters: The new CARES Act that was signed by President Trump on Friday protects homeowners and renters who are suffering from the response to the coronavirus pandemic — but it's not “a one-size-fits-all policy rulebook,” a congressional aide tells Axios.

Go deeperArrow2 hours ago - Health