Last month, Amazon, Berkshire Hathaway and JPMorgan Chase announced plans to launch a joint venture to deliver health care to their employees with the goal of decreasing costs and improving employee satisfaction.
“Our people want transparency, knowledge and control when it comes to managing their healthcare,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase. “The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans.”
The companies have yet to offer specifics and say that the idea is still in early planning stages.
“Our group does not come to this problem with answers,” said Berkshire Hathaway Chairman and CEO Warren Buffett. “But we also do not accept it as inevitable. Rather, we share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes.”
Major health care players are already buzzing about how it will affect their business — with many optimistic that the Amazon-Berkshire Hathaway-JP Morgan Chase venture could target pharmacy benefit managers. What would that mean for patients?
Dr. Robert Goldberg, vice president of the Center for Medicine in the Public Interest, recently offered one explanation of how the venture could affect patient access to treatments.
“Indeed, the joint venture is stirring excitement and driving down share prices of pharmacy benefit management companies (the entities that administer drug benefits and set drug prices for most Americans) because of the possibility that the group will, using Amazon, cut out the PBMs such as Express Scripts and CVS, to distribute and dispense medicines directly,” Goldberg writes in a piece published at Morning Consult. “Companies like Express Scripts make money by extracting rebates from drug and biotech companies in exchange for being included in a formulary, the list of medicines PBMs will cover.
Pharmacy Benefit Managers work with insurers to determine the price you have to pay. First, they negotiate steep discounts from drug manufacturers. They then tell insurance companies which drugs to cover. PBMs also sign contracts with pharmacists and tell them what to charge. What PBMs and insurers don’t do is pass along those savings to consumers.
According to Goldberg, PBMs pocket nearly $120 billion per year in rebates that could be going to patients. He says that the Amazon venture will largely depend on what experts and entrepreneurs they call upon for advice.
“Will the new venture recruit them to create cost effectiveness algorithms that go after medicines that work for patients but generates less rebates in favor of drugs that generate the most?” he asks.
Goldberg cautions that patients could be vulnerable if Amazon adopts the same cost-cutting approach that restricts patient access to personalized treatments.
“Moreover, in an era when more medicines – and treatment patterns – are personalized to the unique situation and biology of smaller groups of patients with complex disease, pushing everyone to the “Amazon Basics” drug formulary could betray customers.”