Vertical Integration saves money. And CVS and its competitors use that to line their pockets, not provide healthcare

I have several times referred to the concept of “vertical integration” in the health care/health insurance/pharmaceutical industry, most recently on March 28, 2026, Everything is becoming more unaffordable, but health care may lead this list!. These posts often reference the posts of former insurance executive-turned-whistleblower Wendell Potter on his substack “Health Care Un-Covered”, including “With CVS’s Vertical Empire Under Threat in Tennessee, the Company Threatens to Leave”, which discusses the fact that CVS, most widely known as large pharmacy chain, also owns the Pharmaceutical Benefit Manager (PBM) Caremark. PBMs are add-on middlemen that negotiate better rates for insurance companies with pharmacies. CVS owns pharmacies, a lot of them. This may seem like conflict of interest (COI), but that is apparently a quaintly outdated concept in this era of mega-corporations.

Actually, the PBM-pharmacy COI is only a part of the CVS megalopoly. They also own one of the nation’s largest health insurers, Aetna, so they have both ends and the middleman! And, to round it out, they own a large primary care provider group (Oak St. Health) and long-term care company (Signify Health) and urgent care provider (Minute Clinic). Just read the AI summary if you Google “Companies CVS owns”, but if you want it, the comprehensive list by the SEC is here. This is what vertical integration is; you buy from yourself, and sell to yourself, set the prices (usually in a way that minimizes tax liability), and make a lot of money. The structure is not hard to understand, but it maximizes the conflict of interest. (For a discussion of why this is conflict of interest and not “potential” conflict of interest, see this blog post from August 20 2010, The AAFP, Coca-Cola, and Ethics: Serving the public interest? . In brief, COI exists when a decider has interests in both parties, and a decision one way would help their other interest. The conflict exists whatever the decision is actually made. A judge hearing a case in which one party is a company in which they own a great deal of stock has a conflict of interest; it doesn’t require waiting to see how they rule.)

To be clear, CVS is far from the only major player in the “healthcare industry” (quotes on purpose, and emphasis on “industry”) that is vertically integrated. The largest health insurance company in the US, UnitedHealth, also owns a PBM, (OptumRx), a primary care group (Optum) and a whole host of other companies (SEC listing here). So does CIGNA (their PBM is ExpressScripts). So, there is competition within the “healthcare” sector; it is an oligopoly (few companies) not a complete monopoly. But oligopolies don’t really compete in the way classic capitalist theory would have it; rather, they tend to set prices and divide up the market so they all do well (although they would prefer the other companies to go out of business, the existence of a few tends to forestall any governmental intervention that might occur with a true monopoly).

Is vertical integration bad? A major argument in favor of it is that it can, and often does, increase efficiency. If you own everything, from insurer to care delivery system to pharmacy, and all the other players in between, you can minimize the obstruction from a piece that is owned by someone else. Things can move more smoothly. Costs can be reduced significantly. These are the arguments most commonly put forward, to the public, by vertically integrated corporations that control a huge market sector, oligopolies as well as monopolies.

It is also the argument put forward to stockholders, particularly large stockholders like private equity firms. Especially the “reduced costs” part. This is very attractive to stockholders. It could also be attractive to those ostensibly served by the “healthcare” industry, those people needing – healthcare. After all, they are heavily burdened by the cost of their healthcare, which constantly goes up. This includes the portion that they are responsible for in the form of premiums, deductibles, copayments and “cost sharing” (meaning insurance only pays a part of the bill and you’re on the hook for the rest). Another recent Potter piece, The Bill That Never Ends, summarizes the situation and addresses the fact that deductibles reset every year, so people are constantly behind the 8-ball and can never pay it off. It reminds me of the compound interest that keeps former students in debt for decades even though they may have paid off far more than the original loan! It is an example of how our laws are set up to benefit large businesses, not regular people.

Which, of course, brings us to the issue of efficiency, and lower costs. To what use is this efficiency, this lower cost, put? Cui bono? There is an argument that such efficiency could decrease the overall cost of health care to the nation, as well as to the individuals who require care, which has actually been promulgated for decades by academics and others. There are fewer of them these days, as it has been demonstrated repeatedly that such an idea is frightfully naïve. Yes, money is saved, but it is all used for greater salaries and bonuses for management and greater profits for shareholders. If it were being used to lower premiums, decrease deductibles, lower the cost of drugs, or increase the availability and affordability of health care, we would have seen it. We have not. Too bad.

A weak, but possibly useful, analogy is to a family. The adults (usually) generate the income, and certainly choose how to spend it. This can be mainly to provide food and housing, education for children, health care (to the extent that it is available) and other benefits for the family. Or it could be spent on relatively transient pleasure for the adults – alcohol, tobacco and other drugs, gambling, etc. Most of us feel that the first is better, a “good” thing, and the second is not good, is selfish, and even reprehensible. Apparently, such moral judgement is not applied to corporations, certainly not, in this case, those involved in “healthcare”.

I keep putting “healthcare” in quotes when applied to the industry. This is because it is not an industry that is at any significant level dedicated to providing healthcare to our people; when it does, this is a byproduct. It is an industry that is dedicated to extracting the most dollars possible from the rest of the economy and putting them in their own pockets. While this is, of course, the goal of most of our industries, it seems worse that “healthcare”, perhaps because of the veneer that come from ostensibly doing something good, seems to be particularly effective at it.

A single payer health insurance system only addresses coverage. A national health service, such as in Britain, is a more comprehensive manifestation of vertical integration. It doesn’t always work well, mostly because it is starved of funds as a political act to demonstrate that the public sector does not run efficiently or effectively, thus an argument to privatize it, which has to some degree been done in the UK. And, like almost all efforts to privatize formerly public services, the cost goes way up, the service does not improve or gets worse, and the money that could have been used to benefit the people is lining the pockets of ganevem. This does not seem like a good use of benefits of efficiency and decreased cost arising from vertical integration to me.

Maybe we can do something about it! Imagine if the phrase “healthcare” industry didn’t have to be in quotes!

 

For more (or maybe just more terse):

“The health insurance company gets a cut, the pharmacy benefit manager gets a cut, the drug manufacturer gets a cut, and the patient…gets screwed!” Rep Alexandria Ocasio-Cortez, interviewing CVSHealth CEO David Joyner at a congressional hearing.

Also “Federal rules require the insurer to spend a certain percent on care. But, when you own the care, when the insurer owns the pharmacy, owns the PBM, owns the drug manufacturer, you also own the health care cost.”

The whole clip is not that long and makes the point about vertical integration very clear, including 1000% markups on some drugs! Thank you, AOC!  If you have time to do nothing else, watch this video!

https://ocasio-cortez.house.gov/media/press-releases/icymi-ocasio-cortez-calls-out-cvs-healths-corporate-strategy-monopolize 

Everything is becoming more unaffordable, but health care may lead this list!

A Mar 23, 2026 NY Times article, “When voters talk about ‘affordability’, many point to health care”, emphasizes how big a deal this is to the American people – and for those who consider this finer point -- American voters. Lots of things have been becoming increasingly unaffordable, so why should health care be different? Housing is ridiculous, and if you live in one of the larger cities in this country, it may well be out of reach. The Times had another piece the same day, “How a Family of 3 Lives on $500,000 on the Upper West Side”, and apparently it is not that easy. In most of America, a family of 3 making a half-million dollars a year, would be rich, but in New York City (and it is similar or worse in San Francisco, Boston, LA, San Diego, DC, etc.) you’re living in a one-bedroom apartment (near Central Park, though) and trying to save up for something bigger, made more difficult by the $4200/month you pay for childcare for your one-year-old, more than the $3900 yoy pay in rent. Doing the math, those two expenses come to less than $100K a year, so they should still have money left, but I guess other things cost a lot as well.

Food is another big issue; even more than housing it is a necessity (there are, sadly, too many unhoused people but no one can go too long without food) and it is a real issue. I had a friend who was from Colombia, and decades ago he observed that he could understand how people could be homeless in the US, but not hungry. Unlike in his country, where housing was cheap and food expensive, you could get a dozen eggs for $1. Well, recently in many places a dozen eggs were above $6. Whatever you think about eating meat, it has become a rare luxury for many families. And gas? Thanks to the US/Israeli attacks on Iran (I take a deep breath and don’t offer more comments) and Iran’s response, gas prices have shot up. I see articles about it being up 20-30%, but where I live in Tucson, AZ it was $2.79 before the attacks and in the same stations is now $4.45 or more (that is about a 60% increase!) The administration has also cut back incentives for non-gasoline cars as they want to push oil and gas – whoops! Since public transportation is so lousy in many places, people depend on cars to get around and get to work when they have a job.

So, with those 3 things – housing, food, and gas (4 if you add childcare) costing so much, it is pretty salient that the people in the Times article single out health care as a main concern about affordability. And, as I have often written, its unaffordability has been increasing and increasing and increasing. Health insurance premiums are up, and for those who receive it through their employers the percent that the employee must contribute is also up. Deductibles are up. Co-payments are up. And even when you pay all that – and frequently people cannot – you may well not get the care you need because insurance companies have ratcheted up their delay-and-deny game, hoping you will give up and not appeal when they deny you coverage for or require your doctor to get “prior authorization” for something you really need, keeping you away with algorithms that stymie your doctors. Or, maybe they completely deny payment because you went to the “wrong” hospital, one that is not in your (really, their) network. Maybe because you were, well, really sick!

Or you could have Medicaid and find that that, as bad as it was, is being cut. Or even more, is cutting you out entirely! Or you may have had health insurance that you could almost afford as an individual through the health insurance exchanges set up by ACA (Obamacare), but now find that subsidies have been cut and there is no way you can continue to afford it. Or maybe you live in a state that never expanded Medicaid (which was the way the ACA sought to cover those too “rich” for Medicaid but too poor to afford insurance on an exchange), and so you have been without access to care for years. Or, maybe are already dead.

Or you could have “traded in” your Medicare, a single-payer program for senior and some disabled people, for “Medicare Advantage”, an insurance company product that sounded great at the start but puts you right back in an HMO, where you have limited providers and the insurance company can deny you coverage. Or, just to be sure that we are not letting anyone out of being screwed, you can have opted for traditional Medicare and find out that the new WiSER program is allowing companies to use AI-based algorithms to deny care in 6 states (so far)!

Wendell Potter’s substack “Health Care Un-Covered” published With CVS’s Vertical Empire Under Threat in Tennessee, the Company Threatens to Leave on the same day (Mar 23) helps explain the reason. While the headline is somewhat optimistic (that the state of Tennessee is trying to reign them in) the real importance is the description of that vertical integration of CVS’ empire, in which they control not just local pharmacies and the health insurance giant Aetna, but also the pharmacy benefit manager (PBM), Caremark, which is now its largest cash cow! It’s a great deal for them, as they pay themselves, and have little competition from small agencies. They do have competition from UnitedHealth, which owns the PBM OptumRx and the provider group Optum, and CIGNA, which owns ExpressScripts, (which Potter explains Just Got Sued for Racketeering), so it is not an monopoly, just an oligopoly with a small number of players. And not one of those players is at all interested in your health. They are entirely focused on their bottom lines, as I discussed on Feb 26, 2026 in The problem with the US healthcare 'system': THE INSATIABLE PURSUIT OF EVER MORE MONEY BY CORPORATIONS AND WALL ST.  

The Times article emphasizes the political conflict between Republicans, who have been responsible for all the cuts and are trying to make it worse, acting exactly as if their goal is to hurt and kill lower-income people, and the Democrats who are trying (unsuccessfully so far) to block cuts to ACA and Medicaid, and perhaps place some limits on Medicare Advantage. But most “mainstream” (read “corporate”) Democrats are severely limiting their suggestions to, basically, returning to Obama-era goals. A significant minority of Democrats in both the House and Senate have signed on to cosponsor the Improved and Expanded Medicare for All bills that would move the US into the mainstream of healthcare in all wealthy countries by completely covering everyone for everything (see Yes, Rep. Van Drew, there IS a solution!,  Dec 30, 2025)! If that happened, the US would no longer be a standout for bad, paying 2-3 times what other countries pay and having worse health outcomes – and, as described above, moving in the wrong direction.

I don’t think that most Democrats are opposed to your receiving quality healthcare at a reasonable price (not sure about Republicans) but they get lots of money from these insurers, PBMs, and health systems. They need to hear from you!

PBMs, pharmacies, and insurance companies: Three legs of a many-legged stool. Or cabal.

PBMs. What are they? Pharmacy benefit managers. Oh, thanks. That clears up a lot!

Well, they are big and important in the health care industry, which should give you a clue: they are somewhere between “not about helping you” and “evil”. Unfortunately, this describes almost every big corporation (pharmacies, insurers, pharmaceutical and device manufacturers, and large health care “provider” corporations) that is involved in health care, or more realistically, sucking money out of the public (directly from you or your government) that was intended to provide health care.

But, back to PBMs. They are, as the name suggests, “managers”, in this and many other cases another word for “middlemen”, set up to be intermediaries between the pharmaceutical companies and pharmacies and insurance companies and you, the consumer (remember that last, “you the consumer”, the one entity in this calculus that has very little weight?). Much of what PBMs do, and a lot of the things that they do that make them more money (and thus could be called “abuses”, since they are not about the only important thing, maximizing the health of the people) are described in this piece from American Progress, “5 things to know about pharmacy benefit managers”. In addition to receiving payments for their services from insurance companies (presumably a legitimate fee, although perhaps for a service that benefits the insurers and not you, and as we shall see below, another scam as many of them are owned by insurance companies!), they also have other little “tricks”. Pharmaceutical companies (another huge pig at the trough of health care dollars) frequently offer discounts in the form of rebates on the cost of expensive drugs – and often, to be fair, negotiated by the PBM – intended to help the consumer. But the PBMs often keep a portion of that rebate. More insidious is that this rebate is a percentage of the price, so the higher the price, the more the PBM gets to pocket. This may (and often does) lead to their “preferred drug lists” having the most expensive drugs as preferred. While this does not cost the patient more (because it puts it in a lower tier), it does make more money for the PBM.

PBMs also engage in “spread pricing” where the amount they receive from the insurer for a drug is more than they pay the pharmacies. And they keep it. And the cost of your insurance and your co-pays can go up to “repay” the insurer for the payments that they make to the PBM. Most of us are familiar with paying for things at a discount, only to discover that the discount is from an inflated “list price”, which already includes a sizeable profit for the vendor. Nowhere is this as common as in drugs; if you have a drug plan (say, Medicare Part D) you are likely to discover that what you pay for your drugs (your co-pay) doesn’t count to your annual deductible, since the insurance company and PBM (now often one and the same) have decided you are already getting a good deal from the discounts that they have received, even when they are pocketing the spread. In 2018, Ohio discovered its Medicaid program was paying $220 million more to PBMs than the latter were paying to the pharmacies for them! Entrepreneurship? Criminal theft?

In a recent piece on his substack, Health Care Un-Covered, health insurance industry whistleblower Wendell Potter describes how ‘The PBM-insurer mafia comes for community pharmacies’. The first important item is contained in the title – “PBM-insurer mafia” – now these two entities are not in competition but in collaboration as two of the “Big 3” PBMs are now owned by insurance companies (OptumRx by United Health and ExpressScripts by Cigna), and the third (Caremark) by a pharmaceutical chain, CVS. This follow the pattern prevalent in all industries, but particularly in “health care” of increasing consolidation, vertical integration, and monopoly power. As Potter describes, one victim of this has been independent community pharmacies. Why such independents are good and of value is eloquently described by one such pharmacist quoted in his piece, so I  won’t re-quote it here; suffice it to say it is what you can imagine is lacking in corporate chains – personal service to people. The benefit to the PBMs of putting independent pharmacies out of business and shunting prescription business to the chains is obvious for CVS/Caremark, but also true for ExpressScripts since it has a deal with Walgreens. And, of course, for all in insurance companies to their owned mail-order pharmacies (which you may get regular emails urging you to use). As is always the case, the lowest income people (who often have the worst insurance coverage, or have Medicaid) are the worst hit, but increasingly insurers and their PBMs have found ways to screw all of us.

There has been increasing political pushback, finally. ‘Last year, Republican Ohio Attorney General Dave Yost said that “PBMs are modern gangsters.”’ This year, Senate Finance Committee Chairman Ron Wyden (D-Ore.) and Ranking Member Mike Crapo (R-Idaho) tried to get new legislation passed; ‘“The time for PBM reform was yesterday,” Wyden said. “It’s past time to crack down on the shady practices of these pharma middlemen that result in higher drug prices for consumers and threaten pharmacies across Oregon and nationwide. I’ll be working around the clock to get this done as soon as possible.”’ But it hasn’t yet passed; it is hard to get consensus on anything in Congress these days, and the insurance companies and PBMs have very powerful (and generous!) lobbies. ‘In recent months, an independent pharmacy, Osterhaus Pharmacy, in Iowa, sued the major PBMs over DIR* fees. In its lawsuit against UnitedHealth, it stated, “This vertical consolidation has served OptumRx well. It now controls not just the pricing of drugs, not just the selection of the drugs covered by Part D Plans, and not just the selection of pharmacy services providers in each Part D network; OptumRx also controls access to almost a quarter of the Medicare beneficiaries enrolled in PBM‐affiliated Plans.”’

Yup. If you are convinced that such consolidation (monopolization) of our health care system is a good thing for efficiency and effectiveness, you should have a UnitedHealth poster on your wall. They are the largest “health” insurance company, control the largest share of Medicare “Advantage” clients, own the doctors’ network Optum, and, as above, control OptumRx. The last two are very big moneymakers for them, and account for much of their growth and profit. But the others are just as bad and would like to be as big.

On the other hand, perhaps you are not so convinced. In which case you should be calling your senators and representatives and letting them know that they should be supporting legislation to rein in the PBMs. And, while they’re at it, the insurance companies. And all the big profit-making corporations jacking up the cost of health care while limiting the care.

They have the dollars. But we have our voices, and our votes!

 

*DIR: Direct and Indirect Remuneration fees, which are charged to pharmacies by PBMs. A much more detailed description of them is in Potter’s piece, but in brief they are another method for the PBMs to scam more money, and to do so without any meaningful transparency.

Primary Care, Private Equity, and Profit: How to ensure poor quality care for the American people

 I -- and many others -- have written (frequently and recently) about the abuses of for-profit companies, and especially private equity companies, and “non-profits” that act like for-profits in health care (Private equity, private profit, Medicare and your health: They are incompatible, May 11, 2023; Privatizing Medicare through "Medicare Advantage" and REACH: The Wrong Way to Go!, Jan 20, 2023; "Private Equity": Profiteers in nursing homes, Medicare Advantage, DCEs, and all of healthcare, Sept 16, 2022). But despite our efforts, it doesn’t get any better. Indeed it gets worse.

Drs. David Himmelstein, Steffie Woolhandler, Adam Gaffney, Don McCanne, and John Geyman, have been leaders in the campaign for a national health insurance plan (e.g., Medicare for All), published an article 18 months ago in ‘The Nation’ (March 31, 2022) titled ‘Medicare for All is Not Enough’. They go through the ways in which the ownership of our health system has changed, particularly over the last decade, to focus on profit for the private owners rather than “health care”. That is to say, while a single-payer Medicare for All program would be a great thing and would limit the negative impact that for-profit insurance companies wreak on our collective health – which is considerable – as long as for-profit companies continue to own, and to increase their share of, our actual health delivery systems (hospitals, nursing homes, pharmacies, and physician practices) there will be terrible consequences, with those single-payer dollars flooding into investors’ pockets rather than patient care.

Insurance companies like United Health and giant pharmacy firms like CVS own large portions of our practice and health delivery sector. And the role of private equity companies and investors, with their “buy ‘em and burn ‘em” approach to acquisition and profit, in taking over our delivery system is at least as terrifying. As the authors state:

At least UnitedHealth and CVS plan to stay in business for the foreseeable future, and may be constrained by the worry that substandard care will damage their reputation. Private equity companies face no such constraints. They promise investors quick profits, and often sell off the businesses they’ve bought within five years, often after stripping their assets and loading them with debts that hobble future operations.

On top of who will own our care provision, there also is the issue of who will provide the care. Most developed countries, with more rational health delivery systems, rely on primary care physicians and other clinicians far more than the US does. In those other countries primary care is at least 30-40% of the physician workforce, while here it is closer to 20% and dropping, an issue I have written about often (see, for example, What is the problem with Primary Care? The US health system!, March 22, 2022).  Primary care clinicians – family physicians, pediatricians, and general internists, and the NPs and PAs who work with them – can provide not only cost-effective care but care that is comprehensive, continuous, and reassuring to people and families because they know the person who is providing it and have a relationship with them. And the cost-effectiveness is not (only) about the fact that they earn less money (see below) but because they are in a position, as a result of taking care of the “whole person” and having a long term relationship, to more wisely utilize resources when necessary. Nonetheless, there is a definite shortage of primary care clinicians, as anyone who has tried to find one recently, because they moved, or their physicians retired or had their practice bought out by a large company like Optum (a subsidiary of United Health Care, which has become UHC’s major profit center as documented by former insurance executive Wendell Potter in his “Health Care Un-covered” substack) or, sometimes in response, went into a “concierge” or “boutique” practice, can testify. Elisabeth Rosenthal, editor of Kaiser Health News, documents this in a recent piece in the Washington Post, “The Shrinking Number of Primary Care Physicians is Reaching a Tipping Point”. She notes that “fewer medical students are choosing a field that once attracted some of the best and brightest because of its diagnostic challenges and the emotional gratification of deep relationships with patients.” And she makes the important point that

One explanation for the disappearing primary-care doctor is financial. The payment structure in the U.S. health system has long rewarded surgeries and procedures while shortchanging the diagnostic, prescriptive and preventive work that is the province of primary care.

Don’t forget that one. Rosenthal discusses the terrible experience of colleague Bob Morrow, MD, who, under financial pressure, finally had to sell his decades-old practice, and then, watching how the new owner ran it (suffice it to say, not in the best interests of the patients), leave medicine. Morrow is not a depressed person, but reading about what has happened to him and thousand of other primary care doctors is enough to make you depressed.

In a data-driven “Report Card” on primary care in the US, the Milbank Memorial Fund ranks it poorly on all front, although not on the quality of the physicians:

This first national primary care scorecard finds a chronic lack of adequate support for the implementation of high-quality primary care in the United States across all measures, although performance varies across states. The scorecard finds:

1.      Financing: The United States is systemically underinvesting in primary care.

2.      Workforce: The primary care physician workforce is shrinking and gaps in access to care appear to be growing.

3.      Access: The percentage of adults reporting they do not have a usual source of care is increasing.

4.      Training: Too few physicians are being trained in community settings, where most primary care takes place.

5.      Research: There is almost no federal funding available for primary care research.

The  report card, created for Milbank by the Robert Graham Center (the policy arm of the American Academy of Family Physicians, AAFP), not only identifies these deficits, but also the importance of solving them for the health of the American people. 100,000,000 people without a primary care doctor, only able to see a physician (if they can see any physician) who has a narrowly focused, disease-based practice is a real problem. We need those specialists for when we are diagnosed with a particular condition that requires their expertise, but they are often not knowledgeable about conditions outside it. Moreover, the primary care clinician does not only care for many conditions; much more important is that they care for the person who has those conditions.

The report also endorses the conclusions from the National Academy of Science, Engineering, and Medicine (NASEM) from 2021, recommending that the US:

1. Pay for primary care teams to care for people, not doctors to deliver services.
2. Ensure that high-quality primary care is available to every individual and family in every community.
3. Train primary care teams where people live and work.
4. Design information technology that serves the patient, family, and interprofessional care team.
5. Ensure that high-quality primary care is implemented in the United States.

Finally, for the moment, an effort is actually being made in Congress to try to increase the number of primary care clinicians.  In an uncommon bipartisan effort, the bill is cosponsored by Bernie Sanders (I, VT), chair of the Senate HELP Committee and Roger Marshall, MD, an OB/GYN and conservative Republican from Kansas, as reported by Jake Johnson in Common Dreams, Sept 14, 2023. It’s a good thing to have bipartisan support, but it is, sadly, unlikely to have a major effect on increasing the primary care physician supply. Funding in the bill – about $6 billion -- goes mainly to Community Health Centers (CHCs), especially Federally-Qualified Health Centers (FQHCs). These centers can be, and usually are, good. They provide care to lower-income people and communities where access to other clinicians is difficult. Republicans like them because they are not actually “government” programs, but responsible only to their boards of directors. But, while they often rely heavily on primary care, and expanding them will increase the number of jobs for primary care clinicians, it does nothing to increase the supply of those clinicians, to convince medical students to enter family medicine, pediatrics, and general internal medicine instead of much higher-paying subspecialties.

I mention money, the Milbank report mentions money. It is a lot about money. It is increasingly difficult to convince students to enter fields where their income is likely to be a fraction of that of subspecialists (even if much better than that of most Americans), especially in the context of huge educational debt (frequently over $250K), and the lack of respect given by the medical profession and often the society at large to primary care. And, not at all to be minimized, the takeover of so many practices by for-profit corporations and private equity, with situations like Dr. Morrow’s becoming the norm rather than the exception. Some subspecialties make 2-3 or more times that of primary care doctors, which makes it increasingly difficult for students to decide to enter primary care. And while some of these subspecialties have grueling work hours (e.g., general surgery) others have much more circumscribed work hours, often shift work and little call.

There IS certainly something the federal government could do. The Center for Medicare and Medicaid Services (CMS) sets the relative reimbursement for physician services (office visits, procedures, etc.) and virtually all private insurance companies reimburse based on multiples of the Medicare rate (traditionally more, but now often less). So all CMS has to do is to revise its fee schedule, increasing the relative value of primary care visits relative to procedures. Of course, there will be great opposition from other specialists; indeed the “RUC”, a non-government committee that advises CMS on this ratio is completely dominated by subspecialists (Changes in the RUC: None.. How come we let a bunch of self-interested doctors decide what they get paid?, July 21, 2013). CMS is not required to follow the recommendations of the RUC although it usually does; CMS could ignore or adjust what the RUC recommends, or reconstitute the membership of the RUC to have more primary care doctors. Primary care physicians do not need to make as much as the highest-paid subspecialists (indeed neither do those subspecialists!) but the difference needs to be decreased. Studies have indicated that if primary care doctors earned 70% of what subspecialists do, income would no longer be a significant factor in specialty choice.

Addressing this income gap is critical for increasing the number of primary care clinicians. Then there is a lot else to do, like getting for-profit corporations and private equity out of healthcare altogether.

 

For a “humorous” depiction of the takeover of primary care by for-profit companies like Optum, check out this short piece by the brilliant Dr. Glaucomflecken: https://twitter.com/i/status/1706339952857149895

Drug corporations from manufacturers to retailers are rotten down the line

Drugs, drugs, drugs. We hear a lot about drugs. Especially about the Opioid Crisis, which is a very serious problem in the US. But the other drug problem we hear about is also very serious: the cost of drugs and the inability of people to access the drugs that they need, not to mention to save their lives, because of the cost.

One such drug is insulin, needed by people with Type 1 diabetes to survive. Stories of people dying from, or almost dying from, lack of access to insulin, or having to go to Canada or Mexico to buy it, are both sad and galling.  It is particularly so in the case of insulin because its discoverers wanted it to be free. In 1923, Frederick Banting and his colleagues Charles Best and James Collip sold the patent to the University of Toronto for $1 each, worried that if they did not patent it drug companies would patent an inferior version of insulin (imagine that!) and people would die. The University of Toronto gave the patent royalty-free to drug companies, specifically Eli Lilly.

Unsurprisingly, that marked the end of being motivated by the public interest. As early as 1941, Lilly and two other companies were indicted for price fixing of insulin, and it has gone on from there. In 1982, Lilly was able to synthesize human insulin (previously insulin was made from beef or pork pancreas, which had a lot of reactions, although pork was closer to human and thus preferred). Of course, the price took off. With the complicity of the government, worse in administrations that believed corporate profit (especially for big donors) was more important than human lives, the price continued to rise. This has led us to story after story about people with diabetes, like Josh Wilkerson, dying because they could not afford $1,200 co-pays. Banting and Best are turning in their graves.

Yes, pharmaceutical manufacturers are greedy and evil, whether they make insulin or Epi-Pen or colchicine, or other drugs (like pyrimethamine – see Martin Shrkeli) and deserve every bit of anger, hatred, and scorn that has been visited on them. They are continually the #1 (or, sometimes, #1!) profitable industry in the US, making lots of money because, well, people need their products to live. But they are not the only part of the drug industry that is responsible for bleeding us for profit. They are complicit with insurance companies, who agree to pay the outrageous prices that they demand (because, after all, they just raise their premiums), and with our bought-and-paid-for Congress. For example, when Congress passed the Medicare Part D Drug Act in 2003 it contained a prohibition against Medicare, the nation’s largest insurer, negotiating drug prices, thus ensuring that American pay far more for drugs than people in other countries (there is a reason uninsured folks go to Canada or Mexico)! As I noted recently, the idea is often put forward that without drug company profit, innovation in pharmaceutical discovery would grind to a halt, but in fact nearly 2/3 of discoveries are made outside the US and most of those in the US are discovered through research funded by the National Institutes of Health.

But beyond the usual villains, pharmaceutical and insurance companies, we have the wholesalers, retailers, and “bundlers” of drugs also making out like bandits (they are bandits, even if, thanks to that bought-and-paid-for Congress, their schemes are often legal) from our health needs. The “bundlers”, called Pharmacy Benefit Managers (PBMs) are contracted by large insurers to negotiate for the “best prices” with pharmacy retailers. For a positive spin on what they do, see this piece from “The Balance”. However, they are also responsible for a lot of the high cost of drugs, especially for those with worse, or no, insurance. In addition, they have a lot of practices that enhance their profit at your expense, many explained in this piece from the Commonwealth Fund, such as jacking up the price charged to insurers and pocketing the difference (“spread pricing”) and pocketing rebates from manufacturers. The entire role of PBMs is complex and bewildering, but they play a critical role in the important process of profiting off of your illness.

More recently, we have seen exposure of the nefarious practices of the final link in the chain of getting you your needed medicines, the retail pharmacies themselves. Of course, the old mom-and-pop drugstore on the corner is almost a thing of the past, having been replaced by mega-chain pharmacies such as CVS, Walgreens, Rite Aid and Duane Reed. (Of course, in many big cities they are still on every corner, not just competing with each other but with themselves; in places like New York City they are more ubiquitous than Starbucks!) These chains drove out the small drugstores by underpricing them, but having been successful in that, they have adopted practices that are frequently unethical, sometimes illegal, and always guaranteed to make them more profit. Indeed, two of the largest PBMs are now owned by these chains (Caremark by CVS and Envision by Walgreens), enhancing the vertical integration of the industry.

A New York Times exposé of January 31, 2020 by Ellen Gabler tells how retail pharmacies overwork their employees, sometimes with resultant errors such as patients getting the wrong medicines and often having adverse effects. It was titled “How Chaos at Chain Pharmacies is Putting Patients at Risk”, but this headline, while accurate, does not explain the real reason for the chaos, which is that these pharmacies are using an old and dishonorable technique made famous by Henry Ford in the early days of assembly lines called “speed up”. Speed-up, increasing the expectations for “production” (in this case, number of prescriptions filled per hour) has been a target of union contracts since the 1930s, but as the influence of unions has waned (with the collaboration of pro-corporate legislatures) these practices have increased. Pharmacists may be “professionals” (like nurses and doctors) but whatever your education and training, if you work for a large corporation who sets the rules and standard and has control, you are a worker, and need the protections that all workers should have. The most conscientious of these professionals have protested, often to the state boards that regulate them, as cited in the Gabler article:

In letters to state regulatory boards and in interviews with The New York Times, many pharmacists at companies like CVS, Rite Aid and Walgreens described understaffed and chaotic workplaces where they said it had become difficult to perform their jobs safely, putting the public at risk of medication errors.

They struggle to fill prescriptions, give flu shots, tend the drive-through, answer phones, work the register, counsel patients and call doctors and insurance companies, they said — all the while racing to meet corporate performance metrics that they characterized as unreasonable and unsafe in an industry squeezed to do more with less.

“I am a danger to the public working for CVS,” one pharmacist wrote in an anonymous letter to the Texas State Board of Pharmacy in April.

“The amount of busywork we must do while verifying prescriptions is absolutely dangerous,” another wrote to the Pennsylvania board in February. “Mistakes are going to be made and the patients are going to be the ones suffering.

So is the problem being addressed? You can be sure that it is, by the corporations that run these pharmacies. How? The complaints of the pharmacists are being taken care of in the way that big corporations often do, that is, ignoring them and deleting mention of them from their reports. In a follow up on February 21, 2020, “At Walgreens, complaints of medication errors go missing”, Ms. Gabler writes:

Pharmacy employees at Walgreens told consultants late last year that high levels of stress and “unreasonable” expectations had led them to make mistakes while filling prescriptions and to ignore some safety procedures.

But when the consultants presented their findings at Walgreens’s corporate offices this month, there was no reference to the errors and little mention of other concerns the employees had raised.

That’s because senior leaders at Walgreens had directed the consultants to remove some damaging findings after seeing a draft of their presentation, a review of internal emails, chat logs and two versions of the report shows.

In one instance, Amy Bixler, the director of pharmacy and retail operations at Walgreens, told them to delete a bullet point last month that mentioned how employees “sometimes skirted or completely ignored” proper procedures to meet corporate metrics, according to the chat logs and the draft report.

Good for you, Ms. Bixler! Took care of that problem! You should get a nice bonus this year!

If these practice are of concern to you, they should be. So should the price gouging up and down the line in the pharmaceutical industry, the drive to profit for manufacturers, PBMs, insurance companies, and retail pharmacies to make lots of money off you, or you die. “Your money or your life!” is an old cliché attributed to highwaymen. It should be the mantra of the pharmaceutical industry in this age of unfettered capitalism.

But no highwayman ever had the reach or power or ownership of politicians that these folks do.