Category: Blog

Pharmacy Benefit Managers (“PBMs”) have come under intense scrutiny recently. A recent report by the Federal Trade Commission (“FTC”) noted that PBMs are profiting “at the expense of patients.” However, before discussing the recent scrutiny of PBMs, it is important to understand what role PBMs play in the overall United States healthcare industry. 

What we consider everyday happenstance today—pharmacies dispensing prescription drugs—emerged in the early 1910s, for narcotics, and in the 1950s for nonnarcotics. Soon after pharmacies began dispensing prescription nonnarcotics, pharmacists founded PBMs. However, not long after PBMs were established, their industry underwent rapid horizontal and vertical integration. The FTC report stated that this integration has led to “the top three PBMs [to process] nearly 80 percent of the approximately 6.6 billion prescriptions dispensed by U.S. pharmacies in 2023, while the top six PBMs processed more than 90 percent.” 

This integration has also caught the attention of antitrust authorities – in 2017 the Department of Justice (“DOJ”) blocked mergers of major health insurers Aetna-Humana and Anthem-Cigna. However, DOJ’s challenges opened the door for two of these insurance companies to merge with some of the largest PBMs in the market. In 2018, CVS Health (the largest PBM, with a 21.3% share of the market) acquired Aetna, while Express Scripts (the third largest PBM, with a 17.1%share of the market) merged with Cigna. PBMs merging with insurers seems to be the current trend—the FTC report noted that “five of the top six PBMs are now part of corporate healthcare conglomerates that also own and operate some of the nation’s largest health insurance companies, including three of the five largest health insurers in the country.”

Now that we know when PBMs originated and how they fit into the broader healthcare industry, it’s important to clarify their role. Essentially, PBMs are the middlemen between “drug companies, insurers, and pharmacies.” PBMs operate within a complex framework, and an entire paper could be written on what role they play; importantly, PBMS:

Act as negotiating entities between several actors in the prescription drug supply chain. Insurers work with PBMs as third-party contractors that manage their prescription drug benefits. PBMs create and update formularies of preferred drugs, with different prices and cost-sharing amounts that influence what beneficiaries pay out of pocket and which medications they can access through their insurance. PBMs negotiate rebates and discounts for an insurance plan from drug manufacturers and determine the prices insurers pay and the payments pharmacies receive. PBMs can also take on the administrative role of directly reimbursing retail pharmacies on behalf of an insurer. Both public and private insurers, including Medicaid, Medicare Advantage plans, employer-sponsored insurance plans, and individual market plans, use PBM services.

So what’s the problem? Along with the FTC report noting that few PBMs dominate the market, PBMs and insurers are generally a part of the same large conglomerate, the FTC importantly noted that PBMs are putting “profits before patients.” PBMs ensure their profits in a variety of ways. As mentioned above, just six PBMs control 90% of the market, so these PBMs, which decide which medicines you may receive and at what price, tend to steer people to the pharmacies they own. The FTC report noted that this creates a conflict of interest which would only lead to an “increase in medicine costs.” Further, PBMs make money through rebates and fees they charge, charges that are dependent on the price of the medicine they are selling—which means when the price of medicine rises, so do the profits of PBMs. Finally, it is worth noting that “PBMs get billions of dollars in rebates and discounts that reduce the cost of brand medicines by 50% or more … [y]et they often force patients to pay based on the full price.” So while PBMs dominate the market and can negotiate the cost of medicine, this cost-saving rate is not reflected in customer costs, who are still expected to pay full price. 

Among the thousands of federal, state, local, and tribal criminal legal systems in the United States, there are over 1.9 million people in prisons, jails, detention centers, etc. Within that population, an estimated 65 percent of individuals meet the criteria for an active substance use disorder (SUD). The Prison Policy Initiative estimates that in jails, less than two-thirds of people are screened for opioid use disorder, and only 54% of those who qualify are provided medication for people experiencing withdrawal. When not treated adequately, opioid withdrawal can be a life-threatening condition that includes symptoms of sweating, nausea, vomiting, agitation, anxiety, etc. People entering the criminal justice system must be medically monitored and provided the treatment necessary to mitigate the harm and potential loss of life that can result from opioid withdrawal.

For a time, Corizon Health Inc., a private, for-profit medical contractor, was the nation’s largest for-profit provider of correctional healthcare. However, following over 1,000 lawsuits alleging substandard care, Corizon went through corporate restructuring, moving its debts to a new company called Tehum Care Services and then filing for bankruptcy, a move often known as a “Texas Two-Step.”  Now, Corizon operates under a new name, YesCare, and has signed a billion-dollar contract with the State of Alabama and has extended its contract with the State of Maryland to provide healthcare services in jails and prisons. It is incredibly concerning that a company, that has over a thousand suits relating to negligent medical care, many of which include wrongful death suits relating to negligent mismanagement of detox, is still responsible for the care of such an emotionally and medically vulnerable population.

Medical malpractice related to SUDs runs rampant throughout the correctional system in the United States, and the increased litigations shed light on the need to implement change that advocates for a population that is increasingly in need of advocacy. A common practice for managing withdrawal symptoms and promoting recovery includes the use of opioid agonists, such as methadone, buprenorphine, and naltrexone (these treatments are referred to as medication for opioid use disorder or MOUD), yet only 24% of jails use MOUD, and only 1% of people with a SUD in prisons report receiving MOUD. Not only are these treatments effective for addressing withdrawal symptoms, but they are also found to be effective in lowering overdose deaths following release from the criminal justice system. Not only are these medications lifesaving, according to a study done by the Bloomberg School of Public Health found them to be “a highly cost-effective intervention” among incarcerated populations. 

With the large sums of money, both from the opioid settlement funding ($55.2 billion) and the Tehum Care Services (Formerly Corizon Health Inc.) litigations resulting in a $75 million settlement, there is a massive amount of money on the table. If funneled appropriately, it can be used to implement MOUD in jails and prisons to reduce the harms of opioid withdrawal, SUD, and post-release overdose. Though the Tehum settlement will go to Tehum’s creditors, it will also go toward plaintiffs who suffered great losses through Corizon’s negligence. Following this impactful litigation, there must be justice for those lives lost and injuries that transpired because of the mismanagement and lack of treatment relating to SUD detoxification. MOUD is a feasible and effective solution to opioid withdrawal and given the funding available via the opioid settlements and Corizon litigations, now is the time to implement change.  

The Biden-Harris Administration recently proposed a rule expanding contraceptive coverage under the Affordable Care Act. Nearly 50 million Americans utilize the Affordable Care Act’s Marketplace for affordable healthcare insurance. The Affordable Care Act also protects over 100 million Americans with pre-existing conditions. On average, American families who use the Marketplace to acquire healthcare coverage save $800 per year.

Notably, the Affordable Care Act also provides millions of women with coverage for contraceptives, saving women billions. The Biden-Harris Administration’s proposed rule would expand the Affordable Care Act’s reach in the area of contraceptives, allowing for coverage of contraceptives purchased over-the-counter.

Currently, under the Affordable Care Act, private health plans must cover the complete cost-sharing of contraceptives prescribed by a provider. In other words, health plans must pay the full amount of all contraceptives accessed by their beneficiaries when prescribed by their healthcare provider. Under the new proposed rule, private health plans would be required to provide coverage for over-the-counter contraceptives, no longer requiring beneficiaries to obtain a provider’s prescription to get their contraceptives. Over-the-counter contraceptives include emergency contraceptives, such as the ‘morning after’ pill. Additionally, the proposed rule would expand the current list of contraceptives that private health plans are required to cover at no cost-sharing to beneficiaries. In sum, the proposed rule would greatly expand the already expansive Affordable Care Act relating to contraceptives.

The proposed rule comes off the heels of Republican congress members’ advocacy to defund the Title X Family Planning Program. Additionally, abortion rights and contraceptive access have been limited over the past years following the overturn of Roe v. Wade. Republican lawmakers advocate for reducing the amount of funds the federal government provides to abortion providers and contraceptive coverage. Specifically, following Donald Trump’s electoral victory these past weeks, Vice President-elect JD Vance has stated that “we don’t think that taxpayers should fund late-term abortions”, emphasizing the incoming administration’s desire to defund and minimize coverage for family planning. In turn, this would leave government protections and financial coverage of abortions and contraceptives to the states and private insurers.

On the other side, the Biden-Harris Administration has made clear its commitment to providing expansive and robust coverage for family planning services. However, as the administration changes with the incoming President-elect Donald Trump taking control, the future of women’s health and family planning remains uncertain. While the Biden-Harris Administration seeks to create a final, agency rule expanding the protection of contraceptive coverage, the incoming Trump Administration has signaled its desire to utilize Executive Orders to roll back Biden-Harris Administration rules. In sum, the future of contraceptive coverage, both under the Affordable Care Act and through private health insurers, remains vulnerable to significant rollbacks.  

Over the last decade, private equity (PE) investment in healthcare has surged, impacting everything from small, private physician practices to major hospital systems. In fact, PE buyouts of physician practices increased by six times from 2012 to 2021. PE’s business model is designed for swift financial returns, with major profits only realized upon sale, which usually happens within five to eight years. This model has sparked debate over its seeming incompatibility with healthcare’s mission to prioritize patient welfare.

PE firms use funds from investors to acquire equity stakes in target companies, which they work with to make “more valuable” and later sell at a profit. The firms use substantial debt to finance their acquisitions. This debt is then placed on the balance sheet of the acquired entity. Next, they look for ways to cut costs rapidly in preparation for a profitable sale. This places pressure on PE firms to prioritize profit margins over long-term stability, even if this means the target entity struggles or goes bankrupt after the firm leaves. This model has substantial repercussions for patient safety and quality of care. A 2023 study published in JAMA by researchers from Harvard Medical School and the University of Chicago found a 25% increase in adverse events in PE-acquired hospitals as compared to non-acquired hospitals. These adverse events included situations such as staffing levels and inconsistent patient safety protocols. 

Regulatory bodies at the state and federal levels have begun paying attention and are addressing the issue.  A rising number of states have enacted or proposed “mini-HSR” laws—modeled after the federal Hart-Scott-Rodino Act, focusing on any transactions that could lead to the consolidation of healthcare markets. As of today, only Indiana has enacted a law that expressly mentions PE transactions in healthcare. Under Indiana’s mini-HSR Act, effective on July 1, 2024, a transaction involving a PE partnership and a healthcare entity is likely to undergo regulatory review. In comparison, Washington’s mini-HSR Act may require a hospital system owned by a PE firm to ascertain the healthcare assets of other portfolio companies of the same firm. States like California and Massachusetts have proposed similar laws. California’s much-watched Assembly Bill 3129 (AB 3129), would have required a 90-day notice to the Attorney General before concluding any transactions involving PE and healthcare facilities. However, on September 30, 2024, Governor Newsome vetoed this bill, due to its overlap with the Office of Health Care Affordability (OHCA) which already oversees healthcare transactions and can collaborate with the Attorney General if needed. This veto signals a significant win for PE and healthcare stakeholders.

The federal government has also turned its attention to PE’s role in healthcare. The Health Over Wealth Act, introduced by Senator Ed Markey (D-MA) and Representative Pramila Jayapal (D-WA), aims to increase transparency by requiring PE-owned healthcare providers and for-profit healthcare companies to publicly report financial and operational data, including their debt, profits, and any reduction in services or worker benefits as a result of the acquisition. These initiatives come on the coattails of The Corporate Crimes Against Health Care Act of 2024 put forth by Senators Ed Markey (D-MA) and Elizabeth Warren (D-MA). This Act seeks to advance new civil and criminal penalties for for-profit healthcare investors who are found responsible for initiating conditions that result in patient harm. 

While PE firms argue they provide proficiency and innovation, studies indicate that these advantages may come at the expense of patient care and accessibility and critics have likened the spread of this detrimental model to a “metastasizing disease.” The question remains: how can we balance the need for investment in efficient healthcare delivery models while maintaining patient health and positive outcomes as a priority? The introduction of state and federal regulations signals a step toward addressing this question. However, with Republican control of both the House and Senate beginning in 2025, restrictive legislation aimed at PE firms may face some considerable setbacks. Nevertheless, the debate over PE in healthcare is far from over and the healthcare industry’s profound transformation under this model will be something to keep an eye on. 

On Thursday, November 14^th, 2024, President-elect Donald J. Trump announced that he was nominating Robert F. Kennedy Jr. to oversee the Department of Health and Human Services (HHS). This nomination came as no surprise since Trump has continuously voiced that Kennedy would play a role in his upcoming administration by helping him make “America healthy again.” 

Despite RFK Jr.’s vaccine skepticism and rather unconventional views on medicine, there is still a decent chance that his nomination gets confirmed by the Senate as only a simple majority—51 votes—is needed and the GOP now holds 53 of the 100 seats in the Senate. With RFK’s potential confirmation on the horizon, Americans should begin thinking about what the country’s state of health, specifically for the country’s children, will look like over the next four years.

One change that RFK Jr. plans to implement as HHS Secretary is the removal of fluoride from America’s drinking water. According to RFK Jr., fluoride is “an industrial waste associated with arthritis, bone fractures, bone cancer, IQ loss, neurodevelopmental disorders, and thyroid disease,” but it should be noted that RFK Jr. lacks a medical background and has a history of spreading misinformation based on conspiracy theories. 

According to the Centers for Disease Control and Prevention (CDC), fluoride is a naturally occurring mineral and when it combines with outer tooth enamel it makes teeth stronger and more resistant to decay. In other words, the addition of fluoride in America’s drinking water helps ensure the health of citizens as the mineral helps prevent the formation of cavities. The federal government first began endorsing water fluoridation in 1950 and the passage of the Safe Drinking Water Act in 1974 designated water fluoridation as a state, not federal, responsibility. Water fluoridation is therefore not federally mandated, rather state and local governments decide on whether to implement water fluoridation in their communities. 

The CDC considers water fluoridation a cornerstone strategy for preventing cavities in the U.S. as it is a “practical, cost-effective, and equitable way for communities to improve their residents’ oral health regardless of age, education, or income.” Studies have also shown that fluoridated water reduces cavities by about 25 percent in both children and adults which provides multiple benefits such as “less mouth pain, fewer fillings or teeth pulled, and fewer missed days of work and school.” Additionally, the CDC estimates that communities that have implemented water fluoridation save about $32 per person a year since there is less of a need to pay for cavity treatments.

Although small amounts of fluoride in our water are beneficial, large amounts of the mineral over a long period of time can lead to the development of dental fluorosis in children, which is a condition that affects the appearance of teeth by causing the outer enamel layer to have white flecks, spots, or lines. While concerns over this condition are warranted given the increasing number of sources that contain fluoride including toothpaste, mouthwash, and even some beverages, HHS released a guidance in 2015 that accounted for these increased risks and advised community water systems to adopt a uniform concentration of 0.7 mg/L of fluoride in drinking water which ensures cavity prevention benefits while also minimizing the risk of dental fluorosis. 

In August of this year, HHS released a report that found higher levels of fluoride exposure, such as drinking water containing more than 1.5 mg/L, are associated with lower IQ in children. The agency has stated that the study “does not, and was not intended to, assess the benefits of fluoride” and that there is a need for further research to better understand whether there are health risks associated with low fluoride exposure.

If RFK Jr. does get confirmed, communities across the U.S. will see an end to water fluoridation. Drinking water will still contain a minimal amount of naturally occurring fluoride, but the amount is so small that Americans will cease to see any oral health benefits and instead are going to see an increase in their dental bills.  

The Family and Medical Leave Act (FMLA) guarantees eligible employees up to 12 weeks of unpaid leave each year to care for a newborn, newly adopted child, and/or a seriously ill immediate family member, or to recover from their serious health condition. FMLA also provides up to 26 weeks of leave to care for a covered service member with a serious injury or illness. Signed into law by President Bill Clinton in 1993, the FMLA has since allowed millions of American workers to take time off without the risk of losing their jobs or health insurance.

While FMLA offers job-protected leave to many American workers, over 40 percent of the workforce remains ineligible. The FMLA applies only to employers with 50 or more employees, public agencies, and public schools. Employers must also provide group health insurance to meet the requirements of the Act. In general, eligible employees must have worked for the covered employer for at least 12 months, accrued at least 1,250 hours of service during the previous 12 months, and report physically to a worksite where at least 50 employees work within 75 miles.

The United States Department of Labor (DOL) Wage and Hour Division released guidance to address concerns regarding the physical worksite requirement. Before COVID-19, remote work was less common, but with digital jobs expected to increase by 25% globally over the next six years, concerns about FMLA eligibility for remote workers have grown. For FMLA eligibility purposes, an employee’s residence is not considered a worksite. Whether or not to include remote employees in FMLA coverage has raised questions for employers. In the 2023 Field Assistance Bulletin, the DOL clarified that an employee’s worksite for FMLA eligibility is the office to which they report or from which their assignments are made. This effectively limits remote workers’ access to protected leave under FMLA.

Another key concern regarding FMLA is whether certain health conditions, including mental health issues, qualify as “serious health conditions” under the Act. Generally, to meet the criteria, a health condition must involve inpatient care at a hospital or medical facility, incapacitating conditions requiring ongoing medical treatment, or childbirth. As of November 2024, the DOL Wage and Hour Division has concluded 349 FMLA compliance actions, with violations resulting in the recovery of more than $1.48 million in back wages for 344 affected employees. The most common FMLA violations include denial of leave, failure to reinstate employees to their same position or benefits, termination, and discrimination.

Access to FMLA is not equally distributed across the workforce. Many workers report returning from leave only to find their benefits have been canceled, or that their job or performance evaluations have changed. Racial, ethnic, and class disparities in access to and use of FMLA are increasingly being documented across the job market. Data from the National Compensation Survey shows that low-paid workers are less likely to have access to paid leave than higher-paid workers. Research by the United States Bureau of Labor Statistics also reveals that Hispanic workers have lower rates of paid leave access than their White non-Hispanic counterparts and that disparities in paid leave access also exist based on factors such as education and employment status. These disparities highlight key issues and opportunities for reform in the nation’s policy on unpaid leave for serious health conditions.