When 22-year-old Cole Schmidtknecht sought a refill for his prescribed inhaler to manage his asthma, he was shocked to discover that what used to cost under $70 at his Appleton, Wisconsin pharmacy was now priced at over $500, as his father, Bil Schmidtknecht, reported.
Leaving the store bewildered, Cole walked away without the Advair Diskus inhaler he needed to prevent asthma attacks, instead taking home a medication meant to address attacks only after they had started.
Just five days later, Cole suffered a severe asthma attack, stopped breathing, and collapsed. Tragically, he never regained consciousness and died, with doctors attributing the death to asthma-related complications.
Billy and Shanon Schmidtknecht, Cole’s parents, hold a system they believe is failing responsible, citing the alarming reality that medication prices can fluctuate dramatically without warning.
In this instance, the surge in the price of Cole’s inhaler was linked to a lesser-known aspect of the insurance market. Pharmacy benefit managers (PBMs) serve as the intermediaries that dictate which drugs are included on an insurance plan’s list of covered medications, known as the formulary.
According to Gerard Anderson, a health policy and management professor at Johns Hopkins University, PBMs alter their drug lists based on profit-driven “rebates” provided by pharmaceutical companies.
“They’re focused on which medications bring them the most money,” Anderson remarked.
Bil Schmidtknecht expressed his disbelief, stating, “It’s insane that it’s happening in America. It’s not broken; it’s designed this way, and it’s causing us pain.”
The Schmidtknechts are advocating for new legislation that would necessitate a 90-day notification prior to any changes to an insurance formulary. They have also initiated a lawsuit against Optum Rx, the PBM that removed Cole’s inhaler from the formulary, and Walgreens, claiming the pharmacy failed to offer adequate asthma management alternatives.
Cole had a rescue inhaler for emergency situations, but Dr. David Bernstein, a professor specializing in immunology and allergy at the University of Cincinnati, explained that such a rescue inhaler alone isn’t strong enough to prevent emergency room visits in severe cases.
The lawsuit contends that Cole didn’t receive the mandatory 30-day notice regarding the formulary change, that his doctor was not informed, and that the pharmacy did not provide him with affordable alternatives.
Billy noted sadly, “It was empty at his house, next to his bed,” referring to the rescue inhaler.
In response to the lawsuit, Optum Rx expressed sympathy for Cole’s death but argued that federal law bars this case from state court. It also claimed that it had provided Walgreens with instructions to reach out to Cole’s doctor regarding three affordable alternative medications, each with a $5 copay.
Walgreens echoed Optum’s condolences but cited privacy protocols that prevented them from discussing specifics of the case while adding that they generally attempt to coordinate with patients and prescribers when a medication is not covered by insurance.
If alive today, Cole would be 24. His parents often struggle to discuss the future he lost. “He was just so young and had his whole life ahead of him. It was so preventable and unnecessary,” Shanon said.
For the Schmidtknechts, it’s about more than just justice for Cole; they aim for systemic change. “Justice for Cole, yes, but it’s more about justice for everyone,” Shanon emphasized.
However, achieving such change is a steep challenge. In the U.S., three PBMs handle around 80% of prescriptions, and according to Anderson, a key tactic of PBMs is to maintain confidentiality surrounding their decision-making processes.
This secrecy often leaves patients, pharmaceutical companies, and insurers in the dark about why certain medications are excluded from formularies.
As Anderson noted, “This information isn’t shared widely, as it’s treated as a trade secret.”
Negotiations between drug companies and PBMs often revolve around favorable formulary positioning, with PBMs aiming to secure the highest possible rebates.
The rebate—the gap between the retail price of a drug and what the PBM pays—can sometimes be significant.
When similar drugs compete, a silent bidding war can ensue.
The rewards for PBMs can be staggering. A recent Federal Trade Commission report indicated that the three largest PBMs—CVS Health Caremark Rx, Cigna’s Express Scripts, and UnitedHealth Group’s Optum Rx—have inflated life-saving medication costs by billions in recent years. These companies have countered that the report’s findings were misrepresented.
In January, CVS Health dismissed the claims as “misleading,” emphasizing that their focus is on making healthcare more affordable. OptumRx highlighted that it helped eligible patients save $1.3 billion last year, with a median out-of-pocket cost of $5 each.
In memory of Cole, both parents have tattoos similar to his inked on their wrists, serving as a constant reminder of their mission for change.
Shanon reflected, “It’s just a little reminder for everyone, from Cole, to keep living and find joy. I often try to remind myself that happiness and grief can coexist.”
