Q&A: How the PBM Step Process, Prior Authorization Impact Patient Access

Amid constant calls for reform among the prescription drug market’s middlemen, or pharmacy benefit managers (PBMs), many experts have begun to uncover practices that directly impact access to medications and patient outcomes. Bil Schmidtknecht, whose son tragically passed away after experiencing a medication drop from his PBM’s formulary, joined Drug Topics to discuss the most detrimental PBM practices uncovered across the country.

“The biggest problem is that whole step process, prior authorization, stuff like that,” Schmidtknecht, founder of Patient Protector and director of patient experience at AffirmedRx, told Drug Topics. “It all leads back to money [and] rebates. $500 billion is a lot of money and the top 3 [PBMs] like that kind of money.”

Now working to fight for patient access and improved outcomes among various stakeholders in pharmacy, he sat down to discuss that PBM practices that led to tragedy in his life and how other families, patients, and pharmacists have been negatively impacted.

Learn about PBM practices from the perspective of someone directly impacted by them. | image credit: Maksim Shchur / stock.adobe.com

“Who gets first placement on my drug formulary, on my prescription list?” he continued. “Who gets to go first? The person who pays the biggest rebate gets to go first. That's what causes these problems.”

Before learning more about Bil’s perspective on common PBM practices, be sure to check out part 1 of our interview with him, where he shared his son Cole’s story and the reasons that made him join the calls for PBM reform.

Drug Topics: Whether through your experience or other patient instances that you’ve observed, is there one PBM practice that you believe is the most detrimental to patient care?

Bil Schmidtknecht: The step process. What goes into the step process? Simply, you're at your doctor. They say, ‘You need this medicine today.’ You show up to a pharmacy and they say, ‘Well, that's not covered, but you have to try this one first before you can get to the medicine your doctor says you have to have.’ It doesn't sound too bad. Maybe they're trying to save you money, and that's what they claim to do. The reality of what it is, and in Cole's situation, my situation, and many other situations, the replacement medicine might have the same copay as me, but it isn’t cheaper. It's not the generic alternative, because there's rebates paid on prescription drugs from the manufacturers. It's a legislatively approved kickback is what it is. Ever since it started back in 2008, 2009, it has been detrimental to the patients because it's a pay-to-play. Who gets first placement on my drug formulary, on my prescription list? Who gets to go first? The person who pays the biggest rebate gets to go first. That's what causes these problems, because they made a change to the formulary. They didn't notify Cole; that's a fact, and that's required under state law. They didn't notify me of the change; that's required under state law. But that step process, essentially, is what set the ball in motion for Cole not getting his drug, and the price being met at what it was.

It went from step process to prior authorization, and prior authorizations don't happen overnight. You have to go back to your doctor. There might be 24-48 hours. And then when you get to a PBM, they can take days to approve a prior authorization. That's if it's not denied first and sent back to appeal it, which happens all the time. There's been documented things with some of the PBMs out there, where they're using AI technology, and in true insurance fashion, they were just denying 1 out of 10 right off the bat, and then it increased more, just to see if they fight back and ask the question. There's been cases of that proof. There was a PBM that got exposed for doing that with their AI technology. It goes on all the time. I have patients that are ex-employees of these companies that come and tell me things. I heard one the other day that made me just cringe. If you call and ask about your prescription at the certain company, it gets held up for an additional 24 hours because you asked the question, and they have to get it to a deeper group of people to look at. That's not it. That's the biggest problem is that whole step process, PA, stuff like that. It all leads back to money, rebates. $500 billion is a lot of money and the top 3 like that kind of money.

The other aspect of that is that it's not just affecting the patient. When [issues with patients’ medications occur], it affects the pharmacists too—independent pharmacists, more particular, because they get under-reimbursed for those prescriptions. You have these net-profit contracts. Take it or leave it. And if you don't like it, you don't get access to that PBM’s customers. And then, that's when the game starts. If you accept the contract, what are you going to be under-reimbursed for today? What are you going to be charged back on 8 months from now, because a box wasn't checked by the provider on how long somebody would use their insulin for? I've never met a doctor who's had a crystal ball before, and the PBMs hold that true. They played games with it. They took charge backs. They've been known to do predatory practices. They call it audits and what-not.

READ MORE: The Differences Between the Big 3, Non-Traditional PBMs

Ready to impress your pharmacy colleagues with the latest drug information, industry trends, and patient care tips? Sign up today for our free Drug Topics newsletter.