Little pills are big business.
Americans spend more than $400 billion on prescription drugs every year, and a patient's face-to-face contact is their local pharmacy. But there's a secret in the drug industry that most customers don't know about. Pharmacists could often save you money by telling you to pay for some prescriptions out-of-pocket rather than through your insurance, but they risk breaching certain contracts by doing so.
"We are being forced to overcharge people for the product, so they're paying more than they should for this medication", said one independent Connecticut pharmacy owner who agreed to talk on condition of anonymity.
Pharmacists across the country have contracts with Pharmacy Benefit Managers, known as PBM's. They are the companies that administer the prescription drug benefit component of your health insurance plan. They also set the amount of your co-pay for a particular drug.
Many of those contracts bar pharmacies from telling their customers whether it's cheaper for them to pay for a drug through their insurance or out-of-pocket. Some consumers, like Patrick Ryan of Canton, say they wouldn't even know to ask the question.
"Sounds kind of backwards. If you have insurance shouldn't it cover your prescription, save you money? Otherwise, why have insurance?" Ryan said.
One pharmacy owner agreed to talk to the NBC Connecticut Troubleshooters only if we hide his identity for fear of financial loss for violating a PBM contract. A clause from the provider manual of one of the largest PBM's clearly states "minimum penalties of $5,000 per incident per day."
"I could charge the patient a cash price and not even go through the insurance and save them an awful lot of money, but I'm not allowed to do that," the pharmacy owner said.
He gave us this example: Let's say you have a $20 co-pay for a generic statin to treat high cholesterol. The PBM might allow the store to keep $6 to cover the actual cost and a small profit and the PBM captures or "claws back" the $14 surplus. Instead, the owner said he could charge the patient $10 if they paid out-of-pocket. He would make a little more, and would save the customer $10 dollars.
"I would like the patient to be able to make an informed decision. If the patient knows the breakdown of the cost structure of this they can decide if they want to pay more," the owner said.
He said he tracked all of his pharmacy's generic prescription sales in 2016. In nearly 750 cases, or about ten percent of the transactions, the PBMs "clawed back" a portion of the co-pay, as much as $65 in one case.
Paul Pescatello from Connecticut Business and Industry Association says the PBM is critical to making the prescription drug process work.
"There are different provisions in all these different contracts, so it's very hard to track who's getting paid what in the supply chain," Pescatello said.
Still, Pescatello says the contractual "gag order" on pharmacists is something the business community would like to see lifted.
"Making that kind of information available to the customer would be helpful to the patient and help reduce the cost of health care," Pescatello said.
The anonymous owner's pharmacy is part of the Northeast Pharmacy Service Corporation, which represents about 300 independent stores that share the same challenge.
The Troubleshooters wanted to find out if the situation is the same with the major national pharmacies, so we reached out to CVS Headquarters in Rhode Island. They referred us to the Pharmaceutical Care Management Association, the national organization representing PBM's. A spokesperson responded with a single sentence:
"Patients should not have to pay more than a network drugstore's submitted charges to the health plan."
The pharmacy owner says he just wants the freedom to present all the facts to his customers.
"Let them make an informed decision about whether they want to give me that money or pay it to the insurance company who, by the way, they've already paid a premium," he said.
Right now, there's a bill that making its way through the Connecticut General Assembly. Senate Bill 445 seeks to eliminate PBM contracts that prohibit pharmacists from sharing all relevant information with the customer. The bill made it out of the public health committee with a unanimous vote and is awaiting action by the full Senate.