Letter to Legislators - Patients Not PBMs
June 26, 2024
Dear Legislator:
The cost of living is top of mind for Massachusetts residents statewide, and healthcare costs are no exception. Legislative efforts to lower out-of-pocket costs, expand access to treatments, and increase transparency within the healthcare system are crucial. Pharmacy benefit managers (PBMs) are an element of this chain that remains unchecked. According to a national poll by Morning Consult, more than 75% of respondents are concerned about PBMs’ business practices and their impacts on out-of-pocket costs. Now is the time to rein in costs and increase transparency by regulating PBM practices.
The top three PBMs, CVS Health’s Caremark, Cigna’s Evernoth/Express Scripts, and UnitedHealth’s OptumRx, control nearly 80% of the market. This means they set the tone and standards of PBM business practices that impact Massachusetts patients and community pharmacies. These impacts are felt in several ways:
Pharmaceutical manufacturers provide significant discounts and rebates to PBMs. In 2022, manufacturers rebated more than half of a medicine’s list price for a total of $256 billion in rebates. However, patients facing a deductible or coinsurance are often charged based on the medication’s full list price rather than the discounted price the PBM has paid. These rebates are intended to benefit patients by lowering out-of-pocket costs, yet PBMs often do not share them with patients in order to increase their own profits.
This system incentivizes PBMs to favor more expensive drugs. They can negotiate steeper rebates in order to increase their profits. PBMs may even exclude inexpensive and generic medications from their formularies to ensure patients purchase more expensive drugs.
PBMs and insurers also implement accumulator adjustment programs (AAP) to prevent manufacturer copay assistance from counting toward a patient’s deductible or out-of-pocket maximum. PBMs use AAPs and other practices to negate the benefit of copay assistance and shift more of the burden to patients, particularly the most vulnerable patients.
PBMs employ spread pricing, charging insurers more for a medication than they pay the pharmacy. According to research by the Massachusetts Independent Pharmacists Association, PBMs received $4.06 more per claim than they paid the pharmacy from 2018-2019. Spread pricing allows PBMs to underpay pharmacies to maximize their profits. PBMs have also increased (DIR) pharmacy fees by 450 times from 2010 to 2017. Many pharmacies report PBM reimbursements as low as 25 cents for a generic prescription. That doesn’t even cover the cost of a prescription label. This has left community pharmacies nationwide in a difficult position, with many being forced out of business.
Fortunately, legislative committees have considered a number of measures that would alleviate these burdens. We are hopeful that you will include meaningful reforms, such as HB978, SB609, SB612, HB953, HB934, HB1016, and HB1215, in upcoming legislative packages addressing healthcare-related issues. These proposals would effectively support community pharmacies and improve patients’ access to and ability to afford the medications they rely upon:
Enact state licensing and oversight of PBMs and authorize the Attorney General to enforce the laws and regulations relative to the operation of PBMs.
Prohibit PBM’s from reimbursing community pharmacies below the pharmacy's cost to purchase a prescription drug;
Require PBMs to pass through at least 80% of manufacturer rebates to patients to lower their costs at the pharmacy counter or when purchasing their specialty medications;
Prevent spread pricing from being used to harm community pharmacies;
Ban accumulator adjustment programs and require PBMs and insurers to count copay assistance toward a patient’s deductible or out-of-pocket cost;
Delink PBM profits from prescription drug prices to eliminate the incentive for PBMs to manipulate prices to increase profits;
Enact a PBM duty of care that prioritizes the patient first; and
Increase transparency and regulatory safeguards for PBMs.
We appreciate the attention and consideration the House of Representatives has given these critical issues. We hope you will continue to support these efforts by enacting meaningful PBM reforms to lower costs and improve access for patients across the Commonwealth.
Sincerely,
Alliance for Patient Access
Asthma and Allergy Foundation of America, New England Chapter (AAFA New England)
Brain Aneurysm Foundation
Cambridge Chamber of Commerce
Diabetes Patient Advocacy Coalition (DPAC)
Envisioning Access
Epilepsy Foundation of New England
HeartBrothers Foundation
IMPACT Melanoma
Infusion Access Foundation
Lupus Foundation New England
Massachusetts Chain Pharmacy Council
Massachusetts Independent Pharmacists Association
Massachusetts Pain Initiative
Massachusetts Pharmacists Association
Massachusetts Society of Clinical Oncologists
National Association of Chain Drug Stores
National Infusion Center Association
New England Hemophilia Association
New England Rural Health Association
New England Venture Capital Association
Patient Pocket Protector Coalition
Patients Not PBMs Coalition
Patients Rising
PILMA
Rare New England
U.S. Pain Foundation
Worcester Regional Chamber of Commerce
