EPharmacy is a Threat to the Environment Driven by Health Insurers and Large Companies
This blog stems from a personal experience.
I am compelled by my health insurer to use a major ePharmacy to get my medication delivered. A single bottle in a huge box is shipped from Kansas City, and travels 1,250 miles by air or truck. The carbon cost and the use of fossil fuels disqualify ePharmacy from being any version of a “green” company.
Behind this process lies collusion of interests that are unwilling to narrow the supply chain and reduce its environmental impact.
Who owns my ePharmacy? United Healthcare — the insurance company that prohibits me from collecting my medication from a local pharmacy in an environmentally friendly way. Believe me, I tried.
The Pharma companies producing the medication have production facilities around the country. They have to ship the medication in bulk to the hub of the ePharmacy, rather than to regional distributions centers.
The ePharmacy ships it to my home.
The triangulation of pharmaceutical companies, health insurance and ePharmacies is not lost for everybody.
The combination of the geographical distance between the big pharma company and the ePharmacy as well as the distance between my home and the ePharmacy is a threat to any efforts to rationalize the supply chain: the Pharma, the ePharmacy and the transport companies are each making their own cut of profit.
Most recurrent medications are prescribed on a monthly basis.
The ePharmacy receives the prescription from the physician. The insurability of the medication is decided by its shareholder, the healthcare insurance company.
Never have I been offered to limit the delivery to once a month.
Never have I been offered to receive each medication in three-month quantities.
These scattered deliveries, in many cases, amount to several shipments a month, which could easily be consolidated to once a month or even once a quarter. This would reduce the number of shipments and constitute an environmentally friendly option to deliver my medication.
And of course, I pay for each delivery an amount that sometimes exceeds the cost of the drug itself.
Collusion Between Health insurance and Large Corporations
When I was at the NYSE, I had the option to pick up my medication at the local pharmacy if and when necessary.
The day the Intercontinental Exchange bought the NYSE, ICE forced NYSE employees to join the ePharmacy system they used. Needless to say, my local pharmacy did not survive.
United Healthcare decided that this was how all of our future deliveries were to be executed.
ICE, United Healthcare and the Optum group colluded to provide me with “free delivery” and deprived me of alternative options.
ePharmacy is a move by insurers to bypass the 13,000 drugstores of the country. Some of them even charge higher copays than the net retail prices.
Time to Recreate Competition and Save Local Pharmacies
Of course, besides them, the pharmacies themselves consolidated without any form of consideration for antitrust or market dominance. Duane Reade merged with Walgreens without any objection from the Department of Justice.
The Biden administration has an easy, albeit powerful, target in this pursuit of healthcare and antitrust policies.
In a recent judgment against Optum, the judge provided reasons to independent pharmacies fighting against Optum seeking to avoid the Courts. This was the reasoning of the judge behind the decision.
- The pharmacies did not sign, never saw and were not provided copies of the agreements;
- Optum did not demonstrate the pharmacies waived their right to seek redress in court;
- Disparity in rights, Optum can exercise self-help if it feels wronged, while the pharmacies must go through a costly arbitration;
- Unreasonably limited discovery. Extremely limited discovery with no depositions;
- Preclusion of live testimony;
- Costly arbitration proceedings. Optum imposed costs on the pharmacy greater than the cost of a court proceeding (with three arbitrators costs could exceed $250,000);
- Precluding aggrieved pharmacies from joining up to have their claims tried together; and
- Optum gave itself the right to arbitrarily change the contract and its arbitration clause at will, without notice.
Time for a federal action
The reaction is starting, at least at the level of the States. Under pressure to rein in skyrocketing prescription drug costs, states are targeting companies that serve as conduits for drug manufacturers, health insurers and pharmacies. More than 100 separate bills regulating those companies, known as pharmacy benefit managers, have been introduced in 42 states this year, according to the National Academy for State Health Policy, which crafts model legislation on the topic. The flood of bills comes after a U.S. Supreme Court ruling late last year backed Arkansas’ right to enforce rules on the companies. At least 12 of the states have adopted new oversight laws. But it’s not yet clear how much money consumers will save immediately, if at all.
There is an urgent need for Federal containment of unecological and uncompetitive behaviors. The reduction of the supply chain through local deliveries, the survival of local pharmacies and the prohibition of all forms of collusion between the pharma industry, the large corporations, the health insurers and the ePharmacies are sound policies.
It also will reduce the extraordinary price of drugs in the United States for patients who bear the costs of this complex and expensive structure.