Patients Not PBMs Coalition Calls on Lawmakers to Create Oversight of Pharmacy Benefit Managers
Broad coalition of patients, patient advocates, pharmacists and drug stores press for urgent action this legislative session
JUNE 26, 2024 / BOSTON, MA - Patients Not PBMs, a coalition of patients, pharmacists, drug stores, and patient advocates in Massachusetts, are calling for passage of Pharmacy Benefit Manager (PBM) reform legislation that would rein in costs and bring needed transparency to “middlemen” who are grabbing costs savings meant for patients.
PBM reform legislation is currently awaiting action in the House, and the coalition is hopeful it will include several vital reform components they outlined in a letter sent to legislators today.
“PBMs profit at the expense of patients, independent pharmacies, employee health plans, and taxpayers,” said Bill Murphy, Director of Advocacy and Public Policy at Epilepsy Foundation New England. “It’s time to advance state policy solutions here in Massachusetts that create more transparency around how PBMs operate, and finally rein in the bad actors who’ve been operating without scrutiny for too long.”
“Growing up with a rare genetic disorder in my family, I am passionate about creating awareness for genetic conditions and ensuring patients can access the life-saving medication they need,” said Haley Director, Board Member, Rare New England. “There’s no reason why Massachusetts, which has always been a national leader in developing accessible healthcare, can’t lead on this issue as well. We urge the House and Senate to adopt legislation that will bring needed reform to PBMs.”
In addition to harming patients, PBMs are squeezing more and more money from small independent pharmacies and drug stores. Three PBMs doing business with MassHealth currently account for 80 percent of all prescriptions dispensed in the United States. The combined revenues for these companies in 2023 were a whopping $924.7 billion. For many independent pharmacists, the shift to PBMs has led to the plummeting of store margins — often to unsustainable lows.
“Every day, we are forced to dispense multiple prescriptions at a lower cost than what we as independent pharmacists pay — in effect, subsidizing giant Fortune 100 companies,” said Michael Wilson, owner of Crawford Drug in Dorchester and President of the Massachusetts Independent Pharmacists Association (MIPA). “The same is true of Massachusetts taxpayers, who are footing the bill for prescription payments to these PBMs to the tune of more than $1 billion every year. Paying pharmacies lower prices is not reducing drug costs — it is just increasing PBM profits.”
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.
“This is another example of corporate greed allowed to run amok due to a lack of oversight,” said Todd Brown, Executive Director of the Massachusetts Independent Pharmacists Association. “Many of our pharmacists are the sole healthcare touchpoint for patients. When they close, it creates pharmacy deserts in the most vulnerable communities.”
“The Massachusetts Pharmacists Association is advocating for PBM transparency to improve medication access and affordability for our patients. At the same time, we are advocating for fair reimbursement to the pharmacies themselves to ensure sustainability. If our pharmacies are not adequately compensated for the many services that they provide to our patients, they would have to close. If our patients are not able to get their medications, their health would be affected and lead to more hospitalizations and put more stress on already overloaded health care system,” said Joanne Doyle-Petrongolo, Secretary, Massachusetts Pharmacists Association.
“NACDS is calling on the Massachusetts legislature to prioritize patients, and to pass and enact long-overdue pharmaceutical middleman reforms in the state,” said National Association of Chain Drug Stores (NACDS) President and CEO Steven C. Anderson. “Meaningful PBM reform is crucial for Bay Staters’ access to care and to the medications right for them, and for the viability of pharmacies of all sizes on which they rely. Importantly, pharmacies are uniquely positioned to deliver an array of healthcare services, including health screenings, disease management, vaccinations, testing services, patient counseling, essential medications, and more.”
This is not just a Massachusetts problem. As noted in a recent New York Times story, The Opaque Industry Secretly Inflating Prices for Prescription Drugs,” pharmacy benefit managers are driving up drug costs for millions of people, employers and the government.
About PBMs
PBMs are a major driver behind the high cost of prescription drugs. Acting as middlemen, PBMs use their consolidated market power to steer patients toward affiliated or preferred retail pharmacies. Over the past decade, PBMs have implemented narrow networks that incentivize or require patients to fill prescriptions at specific pharmacies that are either affiliated with the PBM or that agree to accept lower reimbursement rebates as a condition of network participation. Unfortunately, this does not mean the cost of patients’ prescriptions are lower at the preferred pharmacy; in some cases, the cash price at competing pharmacies is significantly lower than the insured price at preferred pharmacies.
Five of the six biggest PBMs are part of large, vertically integrated organizations. There is significant ownership overlap between PBMs, health insurers, specialty and mail-order pharmacies and provider organizations. Today’s “big three” PBMs – Express Scripts, CVS Caremark, and OptumRx — control over 80 percent of the market, covering roughly 180 million prescription drug customers, and are grabbing tens of billions of dollars in rebates and discounts on medicines that should be passed on to consumers.
About Patients Not PBMs Coalition
Patients Not PBMs is a coalition of organizations formed to raise awareness around how pharmacy benefit managers (PBMs), or "middlemen," are putting profits before consumers' healthcare. The coalition’s focus is to educate consumers about PBMs, and to advocate for policy actions in Massachusetts that will prevent PBMs from continuing to drive up the price of prescription drugs by taking savings away that should be passed along to consumers. Members include a broad cross-section of patient advocacy groups, pharmacists, industry and labor.
