Pharmacy Benefit Managers (PBMs), which began as a way to help patients access drugs they need, have spiraled out of control, with just 3 PBMs—CVS Caremark, OptumRx and Express Scripts—now controlling 75% of the US market
PBMs undercut and squeeze small community pharmacies—some to the point of closure—and activists want the federal government to protect pharmacies that protest PBMs’ abuse from retaliation or being carved out of their networks
WASHINGTON (July 28, 2021) In response to growing monopolistic behavior in the pharmacy and health care industries, particularly by pharmacy benefit managers (PBMs)—where just three PBMs control 75% of the US market and strong-armed abuse of independent and mom and pop pharmacies is widespread—AIDS Healthcare Foundation (AHF) is calling on the federal government to protect pharmacies that protest PBM abuses from retaliation or being carved out of their networks in any way.
AHF’s call for federal government protections against PBM abuse comes on the heels of a damning article in the Columbus Dispatch (“’I just see fraud all over this’: Insiders detail how clawbacks drive up drug prices, hurt pharmacies” July 15, 2021 Darrell Rowland, reporter) that carefully chronicled how PBMs, which act as middlemen between insurance companies and pharmacies, have grown so powerful and emboldened that they now dictate what pharmacies patients can use. These PBMs undercut and squeeze small community pharmacies—forcing some to the point of closure—with clawbacks and other types of “… profit maximization, which so far has escaped substantive public scrutiny (and) is being quietly investigated in multiple states,” according to the Dispatch, which explained the clawback process as follows:
“Clawbacks start when you (or your health insurer) pay for prescription drugs at the pharmacy. Under a contract the pharmacy or an organization representing it signs, the PBM decides how much the pharmacy gets to keep.
In pre-clawback days, that was the end of the transaction. Today, however, if the PBM determines it didn’t make enough from the deal, the contract allows it to “claw back” additional money from the pharmacy months later to make up the difference.
Pharmacies agree to this, because they have no realistic choice other than to agree to a PBM’s terms that permit it to claw back money from pharmacies months after a drug is sold to a consumer.”
Clawbacks are illegal in Ohio and several other states, including Delaware, which instituted a ban on them in 2019. New York and New Jersey are considering bills that would require disclosure of clawbacks to “ … enhance oversight and transparency of PBMs.” In California, the industry—which disputes that their actions should be even called “clawbacks,” refers to the practice as “post-transaction fees.”
“Our David and Goliath battle between independent and smaller pharmacies and PBMs, particularly, the big three: CVS Caremark, OptumRx and Express Scripts, has gotten so out of hand that we need help and protections for struggling smaller and mom and pop pharmacies,” said Michael Weinstein, president of AHF. “And as clawbacks affect consumers in all 50 states, we believe it’s appropriate to ask the federal government to intervene to protect those pharmacies that protest and speak out against PBM abuses from possible retaliation, blacklisting or exclusion from the PBMs’ networks.”
Two Ohio state Representatives co-sponsored anti-clawback provisions that wound up in that state’s budget. The Dispatch also reported that one, state Rep. Thomas West, an Akron Democrat, “… wondered if federal officials should get involved as well, because clawbacks typically happen so long after the original pharmacy drug sale that they don’t make it into official drug-pricing records. That could mean false data are being used by government offices at both the state and federal levels about the true cost of Americans’ prescription drugs.”
“PBMs are determined to continue business as usual gouging pharmacies despite local laws and bans outlawing the practice,” added Weinstein. “We seek to level the playing field for those brave and outspoken smaller and independent pharmacies. An assist from Washington to protect them would be one key step.”
Earlier this year, AHF launched and advocacy campaign to take on PBMs that are undercutting community pharmacies and driving up drug prices. The national campaign is raising awareness about PBMs’ undue influence on patients’ access to the prescription drugs they may need and educating the public and elected officials to call out and prevent PBM abuses.
AHF’s ‘Stop PBMs’ campaign includes direct and online community mobilization, legislative outreach, online and print advertising, a website, social media posts and more, all urging greater regulation of these corporate health care middlemen that are driving up drug prices.
The ‘Stop PBMs’ website (www.ahf.org/stop-pbms) leads with a probing, play-on-words banner headline: ‘Pharmacy Benefit Manipulators?’ The website offers visitors concerned about drug prices and access to the drugs they need several ways they may join or support the Stop PBMs campaign as well as a concise three-minute explainer video (direct YouTube link) that neatly distills the complex issue into an easily understood language and imagery.