A Glossary of Drug-Related Terms

Medicare Part D is, indeed, a scam. I wasn’t sure until I cross-posted my piece from here on the Huffington Post and read the seventeen comments it got. One of the most interesting was from a pharmacist, who compared what he knew the costs of the prescriptions his dad paid were to what his Part D plan charged him, and found that the Pharmacy Benefits Manager for his plan charged a higher co-pay than necessary just to get him to the donut hole faster. Another was from a woman who priced drugs with and without insurance and found the cost of her drugs to be $200 a year cheaper without insurance.

This is yet another thing health care consumers don’t totally understand: when you add a layer of management, you add a layer of profit. Managers don’t manage for nothing. Now that we have our drugs “covered” by insurance (public or private), someone has to be paid to manage the benefits.  That entity is a Pharmacy Benefits Manager. The cost of that Pharmacy Benefits Manager (PBM) is added on to the cost of your prescriptions, as are other costs associated with marketing and selling drugs to the Pharmacy Benefits Manager (which is called “getting the drugs added to the formulary”). The “formulary” is the list of drugs your plan will pay for. Like everything else, Medicare Part D has a formulary, and the different Part D plans have PBMs.

To the consumer, sick or well, this is all so much mumbo-jumbo. What you have to know, whether you are on Medicare or on a private plan, is that all this “management” costs money, and that for the past few years, the drug companies have been claiming their expenses are research and development.  Some are, but others are marketing, and still others are management.

And this is why health care needs to be single payer: in any other industry, if the prices of a product got to be higher than you could afford, you would tell the company to take a hike, substitute a cheaper product, do without the product, or make it yourself to save money. You cannot do this with health care (although more consumers are trying). But you can’t do that with health care, can you. And that’s why after all the noise against Obamacare, socialized medicine, and everything else nasty, the debate is coming back around. We have to do something to reign in costs. Period.

Tagged as: Huffington Post