NEW TPA REPORT: The Expensive Truth Behind Taxpayer-Funded Mail Order Pharmaceuticals

David Williams

May 6, 2013

If you were born in the 1970’s (or before) you probably remember the Columbia House record club where you would buy 6 records for a penny but then they would send you a new record every month at full price.  The trick was that you would be billed for each record and the shipments and the records would keep on coming whether you liked it or not.  Well, those days are long gone but there are some folks that are in this situation with mail order pharmaceuticals as they receive thousands of dollars of unwanted or unneeded mail order pharmaceuticals.  Today, the Taxpayers Protection Alliance (TPA) released a new report that shines a light on the costly truths behind taxpayer subsidized mail order pharmaceuticals (for full report, click here).  The study shows that, while health care and prescription coverage becomes more costly, the delivery of mail order pharmaceuticals grows and is non-transparent and is extremely vulnerable to waste, fraud, and abuse.  Taxpayers are on the hook for billions of dollars in waste because taxpayer funded healthcare programs such as TRICARE, the Federal Employee Benefits Health Program and Medicare Part D that pay for prescriptions are vulnerable to waste, fraud, and abuse.  The practice of automatic refills through mail order is the leading cause of this waste.

The report breaks down the expanding role of Pharmacy Benefit Managers (PBMs), their lack of transparency as well as the many problems with mail order prescriptions that are put on virtual autopilot.

In a survey conducted by TPA, 4,000 community pharmacists were polled and when asked if patients/former patients seem satisfied with mail order, out of 535 who answered this question, 98.3 percent responded “NO” and 1.7 percent said “YES.”  In addition, when asked if the pharmacists thought that mail order creates more waste in the healthcare system, 98.1 percent responded “YES”and 1.9 percent said “NO.” Here are a few explanations of those who said that mail order creates more waste in the system:

  • “I have people asking what to do with all the medicine they have received that they no longer take.”
  • “People bring or try to bring in drugs after patient dies and it is unbelievable the amount of unused drugs sent to them and a lot of children say parents tried to stop them from sending drugs, but just kept sending so they piled up.”
  • “They have a 90 day supply and physician changes med after one week.”
  • “We have had patients bring in thousands of dollars of medication that was sent to them that they had stopped taking and never ordered…”

Every year the Michigan Pharmacists Association holds a medical disposal event in Lansing and at the September 2012 event, they reported that, “548lbs of non-controlled substances and 31lbs of controlled substances” had been given to be safely disposed.  In all, 579lbs of medications that were valued at nearly $1,000,000 in wasted pharmaceuticals were collected in just a single day in just one state capital.

Internal government watchdogs are even starting to question the use of mail order and the problems with PBMs.  According to the report, Patrick McFarland, inspector general at the Office of Personnel Management, testified that “There’s a good chance we’re not getting a good deal…We can’t find out information such as the incentive pay, rebate pay, volume discount pay, administrative fees [of PBMs]. We can’t find that information out, because we can’t audit that; it’s not available to us now.”

A recent Medicare Call Letter raises the issue of waste and added costs from automatic fills and refills by mail-order companies/PBMs. In it the agency raises the issue of waste and added costs from automatic fills and refills by mail-order companies/PBMs when it noted that, “In a related issue, CMS has received complaints indicating that some mail-service pharmacies automatically deliver new prescriptions that were phoned in or e-prescribed from the physician’s office without confirming that the patient wants the prescription filled and delivered. As a result of automatic delivery practices described above, CMS has received complaints that beneficiaries have had medications delivered that had been previously discontinued or were otherwise unwanted and unnecessary at the time of delivery…  Consequently, automatic delivery practices are potentially generating significant waste and unnecessary additional costs for beneficiaries and the Part D program overall. While proponents of these programs tout improved adherence, it remains unclear to us that they can provide evidence of actual improvement in adherence, or that permitting such programs to continue without reorder confirmation is cost-effective.” CMS will now be requiring consent for each prescription fill or refill prior to delivery beginning January 1, 2014.

Congress is also starting to take notice.  In addition to House and Senate letters urging an audit of the mail-order pharmacy program that is offered through TRICARE, during a 2009 committee hearing, Rep. Stephen Lynch (D-Mass.) said this about PBMs: “It’s unbelieveable, the needless complexity of this whole system…it’s built to thwart oversight. It’s built to introduce as much complexity as possible. It’s a scam of major proportions.”

Bipartisan pharmacy audit legislation has been introduced in recent congressional sessions on the federal level. The legislation is based on a straightforward principle that when a pharmacist dispenses the right medication to the right patient at the right time, as prescribed by a doctor, it should not be a punishable offense. In fact states have begun to clarify auditing standards as well as transparency in pricing data on their own over recent years, and we applaud them for exercising valuable oversight for their taxpayers. In addition, TPA supports legislation that would establish broader oversight of PBMs.  The system needs to ensure PBMs and their mail order operations are accountable to the government and the taxpayer. TPA supports further oversight by the government – TRICARE, FEHBP, CMS, and Congress—to ensure that taxpayer dollars are not being wasted on mail order pharmaceuticals.

Potential dollar savings are real. According to GovExec, “FEHBP, with hundreds of different plans available to federal employees and their families, doesn’t do enough to rein in costs, especially when it comes to prescription drugs. According to Lynch’s office, the government spends $35 billion per year on FEHBP benefits, with about $10 billion going to prescription drugs. Prescription drug costs accounted for 3 percent to 5 percent of the annual increases in FEHBP premiums between 2002 and 2007, according to the Government Accountability Office.”

Ordering pharmaceuticals through the mail is not like ordering any other product. There are time sensitivities and the ever-changing tweaks to a prescription that make mail order a less practical way of delivering drugs. Evidence from the Michigan Pharmacists Association, among others, indicates that a flood of unwanted and unneeded drugs are being distributed with no regard to cost or safety. As federal healthcare and prescription drug coverage expands, so does the cost. Sending millions of dollars of prescriptions through the mail puts patients and taxpayers at risk. Pharmacists have always been at the forefront of pharmaceutical prescription and patient care. What most people haven’t realized, however, is that they have also been on the front lines defending against waste, fraud, and abuse in the system.

Receiving prescriptions through mail order is a lot different than receiving books or a movie.  There are temperature and time sensitivities. floods, fires or other catastrophes. When a catastrophe occurs (flood, fires, etc.), people often lose everything including their mobile phones and definitely easy access to the Internet.  Without either makes ordering refills of their prescriptions that they most certainly lost from a mail-order pharmacy almost impossible. Even if they have access to both those, the earliest they would be able to get additional medicine would be a day or two later, which for some chronic care patients is not an option. A brick and mortar pharmacy is likely to have their scripts on record and likely be able to give the emergency refills the same day and in smaller towns where your pharmacist knows your name, even open up early where necessary.

Taxpayers and patients deserve answers about mail order pharmaceuticals and better ways to deliver medication to patients.