The Origin Story of PBM’s.

Posted on | August 13, 2020 | 2 Comments

Mike Magee

Do you know the origin story of PBMs, and why they and their middlemen hold 6 of the top 25 spots in the Fortune 500? Here’s a starter course, excerpted from “CODE BLUE: Inside the Medical Industrial Complex” where the full answer resides.

“When PBMs began, insurers and employers believed that this new entity might contribute to cost control by efficiently processing prescriptions, maintaining approved drug formularies, and holding down prices. But they soon realized that ownership of a PBM by a drug-maker, insurer, or a retail pharmacy giant allowed the owner to coordinate pricing decisions, see competitors’ pricing information, and favor some drugs over others in return for kickback payments, even if the consumer unknowingly was forced to pay more.

There are now about thirty different PBMs. But three major companies control 78 percent of the PBM market and service 180 million Americans.⁶¹ These opportunistic middlemen emerged from three different Medical Industrial Complex (MIC) industry sectors: a physician managed care group, a pharmacy corporation, and a pharmaceutical manufacturing company.

The first one, Diversified Prescription Delivery, was developed in 1988 by UnitedHealthcare, the insurance company that grew out of a physician-run managed care medical group called Charter Med, incorporated in 1974. They were the first to recognize that new information technology would revolutionize the health care industry. Where the WHO owned the ICD-9 diagnosis billing code databases, and the AMA owned the CPT procedure billing code databases, UnitedHealthcare ambitions were far more expansive–to control and mine patient databases themselves. From this perch, they were the first to develop pharmacy drug formularies, hospital admission pre-certification requirements, physician office software that predated electronic medical records, and tight controls on utilization beyond those of other HMO’s at the time.⁶¹

The realization that data now was king spread rapidly. A second PBM, PharmaCare, appeared as an offering from CVS in 1994, and in 2007 was renamed CVS-Caremark.⁶² The third dominant PBM, mail order giant Express Scripts, has a complex parentage. It was formed from the purchase of a SmithKline Beecham’s PBM in 1999 and the addition of Merck-Medco in 2012.⁶³ Five years later, in 2017, Express Scripts reported revenue of over $100 billion compared with Pfizer’s $52 billion of revenue that year.⁶⁴

Their sphere of influence and market power derives from the fact that approximately 4.5 billion prescriptions are filled in the US each year. Americans’ appetite for legal drugs is close to insatiable. Just under 50 percent of US residents have filled a prescription in the last month, and 10 percent of our population currently takes five or more prescription medications.

Approximately $50 billion is expended each year in the manufacturing of these drugs, which move primarily through three giant wholesale distributors in the US—AmerisourceBergen, Cardinal Health, and McKesson—on their way to the retail pharmacy. Their combined revenue in 2015 was $378 billion for distributing the drugs to 60,000 pharmacy outlets, 63 percent of which are part of large retail chains. By 2017, their combined revenue reached $481 billion.⁶⁵

PBMs are now the Grand Central Station of the legal trade of drugs and the primary processors of patient and insurance enrollee data. They negotiate the deals for each and every drug with pharmaceutical companies, the placement of those drugs on insurers’ and employers’ tiered insurer formulary drug lists, and the integration and management of utilization and cost strategies with pharmacies, insurers, and hospitals nationwide. Their cutouts and givebacks to both the drug and insurance industries, and negotiations with hospital systems, share the profits and are nontransparent. Nearly everyone is in on the deal—except the patient.”

A Marshall Plan For America

Posted on | July 30, 2020 | 7 Comments

Mike Magee

Yesterday close to 300 registrants signed up for a webinar sponsored by my Jesuit alma mater, LeMoyne College, titled “The Birth of the Medical Industrial Complex in America, and How Covid-19 Has Made the Case For a National Health Care System”. The college’s motto, “Greatness meets Goodness”, speaks highly of their value system, especially during these challenging times.

During the one hour Zoom presentation, questions flowed in over the chat line which you’ll see reflected in future posts. But the first question asked was, “What do you feel is the most important action step that needs to be taken to start enacting wide-spread change?”

My answer was, “Vote in November.”

I followed that quick response with what I would describe as “A Marshall Plan for America.”

During the presentation, I had shared the fact that, as America’s burgeoning Medical Industrial Complex coalesced in 1950 to beat back President Truman’s plans for a national health care system for our citizens, American taxpayer dollars financed the Marshall Plan construction of national health systems for our two vanquished enemies, Germany and Japan.

In a Rand Corporation post-mortem on nation building some decades later, scholars remarked that, “Nation-building efforts cannot be successful unless adequate attention is paid to the health of the population.”

In the re-build of Germany and Japan under the Marshall Plan, we elected to start with a health plan – in part because we recognized that all other social determinants – justice, housing, nutrition, education, clean air and water, transportation, safety and security – would be enhanced in the process.

We understood that this 1948 infusion of what would today amount to $128 billion would engender trust, improve health and productivity, and process fear and worry which might otherwise undermine the establishment of a civil society and stable democracy.

In answering yesterday’s question, I suggested that we as American citizens essentially face a challenge of similar magnitude.

In rejecting Trump, we are battling the dual scourges of a badly mismanaged pandemic response and the fires of historic and systemic racism. But in addition, we are opening the doors to a cultural and political awakening that could be “A Marshall Plan for America.”

The health care underpinnings of such a plan were driven deep into our cultural soil over a decade ago and have survived relentless attempts to unearth and destroy. These include fundamentals: Health is essential and a universal right. Universal health coverage is necessary to assure population health. All health plans must include comprehensive benefits. Patients with pre-existing conditions must be protected. Our most vulnerable populations are a top priority.

Upon these anchors, and now the sacrifices of over 150,000 Americans dead in part because of Trump’s incompetence, we see revealed the basic “next-step” building blocks of a new deal for America.

Universality: Coverage for all – shared responsibility and risk.

Strategic Planning: Multi-year national health priorities layed out by a truly representative governance body.

Efficiency: Streamline payments, annual negotiated budgets, strict oversight, standardized national billing and payment systems.

Transparency: No DTC advertising. No kickbacks inside PBM’s. No data profiteering. Industry funded academic researchers must register as lobbyists.

Local Control of Delivery: Federal standards with local autonomy. Public insurance is primary. Private insurers are secondary and supplemental.

The unleashing of a Marshall Plan for America could be triggered by the offering of a “public option.” The response of parents of adult children, employees on skimpy employer based plans, newly covid unemployed, underinsured, uninsured and vulnerable will further strengthen our national resolve and advance our evolution towards unification, peace and productivity.

As Trump and Covid have made clear, “a thousand points of light” is no more a substitute for “good government” than it was for our vanquished enemies following World War II. As we did for them then, we must now ask the difficult question “How do we make America, and all Americans healthy?”

And then build out the answer – from the bottom up.

Category: Uncategorized

The Cascading Catastrophe of Trump.

Posted on | July 21, 2020 | 1 Comment

Mike Magee

With the ongoing, cascading catastrophe of Trump’s mishandling of COVID-19, it is easy to lose sight that the next pandemic (fueled by global warming, global trade, and human and animal migration) is just around the corner. And we haven’t even begun to nail down the origin story of this one.

Unraveling the transmission trail requires international cooperation. As one expert recently noted, “Origin riddles for other new infectious diseases often took years to solve, and the route to answers has involved wrong turns, surprising twists, technological advances, lawsuits, allegations of cover-ups, and high-level politics.”

What we do know is that there are originators, intermediate hosts, and human super-spreaders….and COVID-19 appears to have begun in China. These are not new insights. We’ve seen this playbook before.

The 2002 Severe Acute Respiratory Syndrome (SARS) rode palm civets to the human hosts.

The 2012 Middle East Respiratory Syndrome (MERS) utilized camals as intermediaries.

The Influenza Pandemic of 2009 traveled through Mexican pigs which had been imported from Europe.

This particular tragedy appears to have begun in Wuhan, China, with the first documented case occurring in December, 2019. The city is the site of the Wuhan Institute of Virology lead by the highly recognized bat virologist Shi-Zheng-Li.

WHO experts will be meeting with China’s experts to share information that has only been released in bits and pieces.

For example, the original working assumption is that this pandemic began in Wuhan’s open seafood market. In January, 2020, there was a small cluster of pneumonias there, and the market was closed and disinfected. But a later study outlined five early cases, four of which had no ties to the market.

The next thrust, fueled in part by the Trump administration, was the pandemic was the result of an inadvertent or purposeful release of the microbe by Shi. Scientists who have now studied the viral genome have uncovered no telltale marks of lab-based engineering.

The lead theory presently is bat-based transmission through an animal intermediary, possibly feral cats, led to the first human infections.

A hostile US government has not served to enhance information exchange. Quite to the contrary. Enlightened leaders are fully supporting the WHO, seeking answers to questions as recently detailed by veteran Science writer Jon Cohen:

1. “Does more epidemiological data exist about the earliest cases than have been made public so far…?”

2. “How aggressively have Chinese researchers looked for SARS-CoV-2 in samples collected before the first known cases in Wuhan?”

3. “Have they looked outside of Wuhan? How far back in time have they probed?”

4. “Can widespread screens be done of bats and other wild animal species thought to be susceptible to SARS-CoV-2 and common in China, including primates, deer, and rodents?”

5. “Can widespread screening of susceptible domesticated animals provide clues to COVID-19’s origin?”

6. “Do stored samples from farmed animals exist?”

7. “Can widespread screening take place of people in China who might come in contact with bats or other wildlife that harbor SARS-CoV-2?”

8. “Do government health reports contain any information about possible COVID-19 cases that predate 1 December 2019, the first confirmed case of SARS-CoV-2 in the scientific literature?”

9. “Are there stored samples from sewage plants in China that can be probed?”

10. “Did Shi’s team ever work with coronaviruses in that lab, and, if so, why?”

Answers to these questions, and many others that affect the future of our nation, await the results of November’s election.

Category: Uncategorized
Tags: covid > Pandemic > trade wars > trump > WHO

The Supreme Irony of Dr. Trump.

Posted on | July 14, 2020 | 3 Comments

Mike Magee

What a strange irony. Trump decides, full-bravado, to challenge China to a trade war just months before China unwittingly hatches a virulent pandemic that collapses our deeply segmented health care system and our economy simultaneously. And rather than cry “Uncle”, our President then fires the WHO just as their experts are heading to China to attempt to unravel the mystery of covid-19.

And here at home most Americans awaken, forced to acknowledge the absurdity that our case rate and mortality from Covid-19 have made us a pariah worldwide. Our convoluted health system of third-party payers, and the pretzel positions our politicians weave in and out of as they try to justify it, reform it, then un-reform it is defenseless. Congressional loyalists continue to find solace in telling themselves, “Well, we still have the best health care in the world.

In point of fact, we’re not even close to having the best health care in the world. As legendary Princeton health economist Uwe Reinhardt prophetically remarked two years prior to COVID-19, “At international health care conferences, arguing that a certain proposed policy would drive some country’s system closer to the U.S. model usually is the kiss of death.”

It is at times of crises like these that system weaknesses expose themselves. The inability to swiftly and efficiently test a population for COVID-19, share those results, and rationally plan a coordinated and effective response is a reflection of the gross inadequacies of our health care system. So is a leaky and disjointed supply system that can’t manage demand for the basics required to protect health professionals.

In a review of my book, CODE BLUE: Inside the Medical Industrial Complex last year, John Rother, President and CEO of the National Coalition on Health Care wrote, “Code Blue will make you mad, but it will also make you better informed and better able to understand what we need to do as a country to fix it. I can’t think of a more persuasive book on the need for change.”

The need for change that John forecasted not only included matters of justice, planning, and equitable distribution of health care resources, but also the capacity to respond to a global public health disaster of the magnitude of COVID-19.

God Bless Anthony Fauci, and his continued back and forth with Trump, but is our system so fragile that the fate of Americans rests on a single individual having the temerity to speak truth to power in the face of executive incompetence?

A half-century of systematic underfunding of public health, planning and prevention in deference to entrepreneurial scientists in pursuit of profit and patents over patients and families, ends here – in crisis.

We will survive this “Code Blue” calamity, but we need to assure through new leadership and deliberate action that it will never happen again – never.

For now:

Ignore Trump and Pence.
Encourage your local leaders and each other.
Vote with your head, not your heart (or your gut), in the next cycle.

Category: Uncategorized

Trump Dumps WHO and Places All US Citizens At-Risk.

Posted on | July 7, 2020 | 7 Comments

Medical organizations this week reacted with alarm as President Trump unilaterally and publically announced on July 7, 2020, his intent to withdraw from the WHO. Putting aside that it is questionable that he possesses the power to follow through with this latest threat to the nation’s health, the move was enough to draw a unified response from major medical associations, a statement I share below.

But first a list of obvious reasons why Trump’s view is unenlightened and dangerous:

The United States is a critical player in the WHO.
Data sharing between the WHO and the US Public Health system is extensive.
Global disease surveillance, in the age of global warming and mass human migrations, is now more critical than ever.
The U.S. is home to 83 different WHO collaborating centers including universities and governmental sites.
Our nation’s biosecurity is intimately integrated with the WHO.
Disrupting our relationship as Fall approaches at the intersection of Covid-19 and seasonal flu is beyond dangerous.
The WHO tracks flu rates for 112 nations including our’s.
The Global Polio Eradication Initiative and international HIV/AIDS efforts initiated by President Bush are housed at the WHO.

All voters, especially health professionals, should be advised that Trump policies spell disaster for all citizens of the world, including ours. Here’s the statement from organized medicine:

The following statement is attributable to: AAP President Sally Goza, MD, FAAP, AAFP President Gary L. LeRoy, M.D., AMA President Susan R. Bailey, M.D., and ACP President, Jacqueline W. Fincher, MD, FACP

“The Trump administration’s official withdrawal from the World Health Organization (WHO) puts the health of our country at grave risk. As leading medical organizations, representing hundreds of thousands of physicians, we join in strong opposition to this decision, which is a major setback to science, public health, and global coordination efforts needed to defeat COVID-19.

“The WHO plays a leading role in protecting, supporting, and promoting public health in the United States and around the world. The agency has been on the frontlines of every global child health challenge over the last seven decades, successfully eradicating smallpox, vaccinating billions against measles, and cutting preventable child deaths by more than half since 1990. Withdrawing from the WHO puts these investments at risk and leaves the United States without a seat at the table – at a time when our leadership is most desperately needed.

“As our nation and the rest of the world face a global health pandemic, a worldwide, coordinated response is more vital than ever. This dangerous withdrawal not only impacts the global response against COVID-19, but also undermines efforts to address other major public health threats. The American Academy of Pediatrics, American Academy of Family Physicians, American College of Physicians and American Medical Association strongly oppose this short-sighted decision. We call on Congress to reject the Administration’s withdrawal from the WHO and make every effort to preserve the United States’ relationship with this valued global institution. Now is the time to invest in global health, rather than turn back.”

Category: APA,AAFP,ACP,AMA, WHO, Trump mistakes, Uncategorized

How Did We Come To This – Predatory Pricing of Remdesivir?

Posted on | July 2, 2020 | 2 Comments

Mike Magee

In the middle of a deadly pandemic, marked by failed Presidential leadership and a collapsing hospital care network, an effective treatment is priced out of reach to those who need it the most.

Those interested in the complete history can read CODE BLUE: Inside the Medical Industrial Complex. The more condensced answer appeared recently in The Health Care Blog under the title, “The Medical-Industrial Complex Pads Its Pockets As We Empty Our’s.”

If you want to see predatory capitalism at work today, you could do no better than observe the recent actions of Gilead Sciences as they manipulate the price and access to their covid-19 therapy, remdesivir.

No matter that this “Made in America” pharma company’s product is heading rapidly to an off-patent cliff. Investigative reporters reveal that the Foster City, California company has signed confidential licensing deals with nine pharmaceutical manufacturers, including seven suppliers in India.

What’s the deal? Gilead has agreed to abandon generic blocking moves on the companies to slow the emergence of relatively low cost generic versions of remdesivir in return for highly selective distribution.

About 50% of the world’s patients would be excluded. Where do these worldwide citizens live. In the richest nation’s in the developed world including U.S., Brazil, Russia, Britain. Why these? As one legal expert commented, “Gilead excluded these countries because they have commercial potential and because Gilead wants to reserve the right to prevent competition and charge higher prices.”

Currently, the U.S. pays a premium for the aging drug. Hospitals on average pay the company $3,120 a patient for a five-day treatment. It’s made for a few dollars per treatment. The generic companies plan to sell the therapy for about $350 for five vials to poor countries where distribution (according to the secret pact) will be allowed.

The U.S. government has reserved a half million doses from Gilead at the inflated price. As our government goes mute in support of home-grown predation, Doctors Without Borders voice is loud and clear. Their statement: “If remdesivir is found to be effective and is approved, Gilead should not be allowed to enforce its patents nor claim any other types of exclusivities over remdesivir. No company should profiteer off this pandemic.”

Category: Uncategorized

A Reminder to Coca-Cola & PepsiCo – Black Lives Matter.

Posted on | June 25, 2020 | 1 Comment

Mike Magee

Across America, we are experiencing an awakening to our unrelenting racial biases and prejudicies. These are expressed in a culture that is unforgiving, violent, and at times deadly.

Death, as we’ve seen can come at the hands (and knees) of police; by inequalities in education, safety, and economic opportunity; or by poor health, whether by lack of access to care or targeted predatory advertising of minority communities.

A few years back Coca-Cola and PepsiCo promised to advance low-sugar beverage alternatives. At the very same time, they ramped up advertising of high calorie sodas to youth and minorities.

Fresh evidence of these behaviors was laid bare in a report last week from the Rudd Center for Food Policy & Obesity at the University of Connecticut.

Their findings:

· Compared to white children and teens, Black children saw 2.1 times as many sugary drink ads and Black teens saw 2.3 times as many. Black youth exposure was particularly high for sports drinks, regular soda, and energy drinks.

· In 2018, companies spent $84 million to advertise regular soda, sports drinks, and energy drinks on Spanish-language TV, an increase of 8% versus 2013 and 80% versus 2010.

· Sports drink brands disproportionately advertised on Spanish-language TV, dedicating 21% of their TV advertising budgets to Spanish-language TV, compared to 10% on average for all sugary drinks.

· From 2013 to 2018, teens’ exposure to TV advertising increased for regular soda/soda brands (+1%) and iced tea (+68%), despite a 52% decline in time spent watching TV during the same time. Energy drinks and sports drinks targeted their TV advertising directly to teens, as evidenced by high ratios of ads viewed by teens versus adults.

· Preschoolers’ saw 26% more TV ads for sugary drinks in 2018 than in 2013, and children’s ad exposure increased by 8%. These increases occurred despite a 35% decline in average TV viewing times for preschoolers and a 42% decline for children during the same period.

· PepsiCo and Coca-Cola were responsible for 38% and 31% of all sugary drink advertising spending, respectively. PepsiCo sugary drink advertising spending increased by 28% from 2013 to 2018; Coca-Cola sugary drink advertising increased by 81% during that time period.

· Four brands each spent more than $100 million to advertise sugary drinks in 2018: Coke, Pepsi, Gatorade, and Mtn Dew.

In this day and age, as we confront our past, and the injuries we have imposed and condoned on a large number of our citizens, we can no longer turn a blind eye to corporations in America. If they signal through their predatory advertising that “Black Lives don’t Matter”, they do not deserve our support.

Category: Uncategorized

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