Cracking Down on the 'Legal' Drug Cartel

Why does a 60-day supply of a chemo drug cost $17,000 at CVS (CVS), but just $72 at Mark Cuban's Cost Plus Drugs? That's what a Congressional subcommittee demanded an answer to in recent hearings as it decided unanimously to crack down on pharmacy benefit managers ("PBMs"). I've been ranting about PBMs for years, going […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] Cracking Down on the 'Legal' Drug Cartel By Herb Greenberg --------------------------------------------------------------- [AI just had its 'iPhone moment']( We just hit a pivotal moment in the world of artificial intelligence. And it's about to change everything about life as you know it. And early investors stand to make huge profits as this $87 trillion AI "shockwave" hits the stock market. [Find out which five stocks to buy right here](. --------------------------------------------------------------- Why does a 60-day supply of a chemo drug cost $17,000 at CVS (CVS), but just $72 at Mark Cuban's Cost Plus Drugs? That's what a Congressional subcommittee demanded an answer to in recent hearings as it decided unanimously to crack down on pharmacy benefit managers ("PBMs"). I've been ranting about PBMs for years, [going way back]( to 2012, and more recently, in an Empire Financial Daily essay titled, "[Scrutinizing the 'Legal' Drug Cartel]( – when I wrote... Talk about cartels... In the murky world of drug pricing, the PBMs are the middlemen – or as the FTC puts it, the "powerful middlemen." It's great to see Congress finally take a peek, but realistically, jaded as I am, I doubt anything will come of it. The PBM lobby is simply too powerful, and Congress is simply too divided and weak. But that doesn't mean I plan to stop ranting... If you don't know what PBMs are, you're not alone... They're the middlemen between the pharmacies and the insurance companies. They also handle the distribution and sales of drugs for insurance companies and government programs, like Medicare. They portray themselves as the good guys who help lower the cost of drugs. But to most of us, they're just the opposite... They're the entity that runs the "formularies" that decide which drugs are covered by your insurance plan. That means they have final say in what drugs are available to you, where you can pick them up, and what prices you pay for them. If you're a pill popper, as I am, you've likely experienced some version of what I like to refer to as the "Formulary Follies." That's when your doctor prescribes a drug, but then the pharmacy tells you that "it's not in the formulary." So your doctor then has to jump through hoops explaining why that drug is the right drug for you and should be covered. Then, even if it ultimately is, you might have to pay a big premium, because... it's not in the formulary. And get this: That formulary changes every year, thanks to all sorts of opaque backroom wheeling and dealing the PBMs have with the drug companies, which in turn causes havoc for many of us, especially those of us on Medicare. (If you're on Medicare, you might want to read my latest annual rant on that [here]( It makes absolutely no sense, but there is little you or I can do about it. Here's the crazy part... The biggest PBMs are CVS Health's Caremark, Cigna's (CI) Express Scripts, and UnitedHealth's (UNH) OptumRx, which together control nearly 80% of the market. The latter two are owned by insurance companies, while CVS owns an insurance company. Talk about conflicts! --------------------------------------------------------------- Recommended Link: [The only money-making acronym you need to know for 2023]( Soon, the acronym "PVAB" could be as commonplace as "ASAP" or "TGIF." But if you don't know it yet, you're not too late... By the time it fully rolls out, PVAB will have a bigger lasting impact on our society than the Internet. That's why some of the biggest names in the business – from Bill Gates to Jeff Bezos and Elon Musk – are pumping billions into it. To see how you can get massive returns from what could well be the biggest investment opportunity of this year, [click here now](. --------------------------------------------------------------- The irony is that PBMs were devised in the 1960s to lower prescription drug costs... The idea was that PBMs would use their vast networks to negotiate lower reimbursement rates with pharmacies and discounts with drug manufacturers. Since they were supposedly "independent," they had incentive to pass those savings back to their health plan sponsors, and therefore, to patients. This setup soured as drugmakers increasingly acquired PBMs. Think about that for moment... The drug manufacturers were coordinating pricing policies, spying on competitors' pricing information, and favoring their own drugs over others. By the 1990s, the Federal Trade Commission ("FTC") cracked down, and before long, those deals were unwound. And who bought them? If you haven't already guessed, the pharmacies did! Starting with CVS' 2007 acquisition of Caremark for $27 billion, the idea was that the combination would help it provide customers with a more comprehensive range of services and a more seamless experience. For instance, CVS customers with a Caremark plan could fill their prescriptions at any CVS location. Seems convenient enough... But did anybody ever wonder what would happen if CVS decided to give pricing preference to drugs dispensed from its own stores? That's an obvious conflict, right? Not according to the PBMs, who blame the drug companies for the pricing mess. Their trade group – the Pharmaceutical Care Management Association – goes so far as to warn in big, bold type on its website... Don't let big drug companies' smoke and mirrors fool you: High drug costs start and end with them. That brings us back to Cost Plus Drugs, which is proof it doesn't have to be this way... [As I wrote last October]( Mark is proving to be the disrupter of an industry that nobody else seemed to be able to disrupt. Even if others had the idea he has, nobody else has been able to execute on it. And let me state upfront: I'm a fan because I'm a customer. I'm now using Cost Plus for three of the six generic drugs I take every day. It's better than GoodRx (GDRX) and Costco (COST), and quite often – 50% of the time this year – better than my supplemental Medicare drug plan. Cost Plus can do this, it says, because it takes a simple 15% markup to sell only generic and unbranded drugs. And it hasn't even started manufacturing its own drugs, which it claims it intends to do. Of course, there are tradeoffs... Don't expect to call and talk to someone or get a personal reply to any question you might have... certainly not in a timely manner. Beyond that, I've found it to be no different than any other mail-order pharmacy. The scripts are filled quickly, they keep me in the loop, and within a few days the drugs are delivered to my front step. You can only hope that Mark has stumbled on something here and somehow helps disrupt the cartel. I know I said I don't think Congress will do anything, but doing something on this issue might be the most bipartisan thing they could do. It would be a win-win for everybody... except, of course, the PBMs. I want to hear your experiences with PBMs... I expect I'll hear some horror stories. Send them to me by [clicking here](mailto:feedback@empirefinancialresearch.com?subject=feedback%20for%20herb). Regards, Herb Greenberg June 22, 2023 P.S. A special thanks to Empire's Kyle Wehrle for his research on this piece. [Get a 60-day, 100% money-back trial to Empire Real Wealth by clicking here.]( --------------------------------------------------------------- If someone forwarded you this e-mail and you would like to be added to the Empire Financial Daily e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2023 Empire Financial Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Empire Financial Research, 1125 N. Charles Street, Baltimore, Maryland 21201 [www.empirefinancialresearch.com.]( You received this e-mail because you are subscribed to Empire Financial Daily. [Unsubscribe from all future e-mails](