Fix prescription-drug access by regulating middlemen
Nothing to see here. During a state meeting in Tallahassee, when the Agency for Health Care Administration (AHCA) met with state senators, that seemed to be their message. AHCA is the agency that oversees Florida’s multi-billion-dollar Medicaid program. Yet there is ample evidence that the big pharmacy benefit managers (PBMs) that run the Medicaid Pharmacy Program are making profits of millions of dollars. These companies are not Florida-based and are a drain on taxpayer funds.
Every single state leader and resident should be rattled. Here is why.
Access to prescription drugs for vulnerable and underserved communities is shrinking. According to the National Community Pharmacist Association, in just four years 700 independent pharmacies shut their doors across the United States.
These closures effectively block access to affordable prescription drugs in poor and inner-city locations because independent pharmacies often serve higher numbers of Medicare and Medicaid patients. One of the major reasons there is a severe access issue and affordable prescription drugs is because of PBMs. These prescription drug middlemen have incredibly broad power. They pick which drugs are covered by your insurance company, often more expensive drugs that are more profitable for them; decide which pharmacies you can go to; and even determine how much a pharmacy gets reimbursed. And because big PBMs own and operate their own pharmacies, the power they exert in the pharmacy marketplace directly impacts the bottom lines of the companies they own, as well as their competitors. When you begin to unpack exactly how PBMs work today, the reality of their unregulated power comes into focus.
There is a lot of misinformation being peddled by those who want to keep PBMs’ operations and profits out of the public eye. PBMs select which prescription drugs are covered based on which drug manufacturer gives them a bigger rebate, which is money they often pocket.
The rebate given to the PBM is typically a portion of the price of the drug, which means more expensive drugs end up on the list of drugs covered because PBMs get a bigger paycheck.
Taking on PBMs requires grit, especially considering their political prowess, but considering that PBM reform could save the state more than $100 million, it’s a worthwhile endeavor.
A recent state-commissioned report showed just how much these prescription drug middlemen are profiting from taxpayers. PBMs pocketed $89.6 million of taxpayer dollars through spread pricing, which occurs when the PBM charges a payer more than it reimburses the pharmacy for a prescription drug and they keep the difference. This practice is so bad, it’s banned in several states. Overall, we estimate that PBMs are siphoning more than $113 million in taxpayer dollars from Florida’s Medicaid system. That is a lot of money for middlemen who do not provide actual health-care services.
The report also showed clear evidence of anti-competitive behavior. CVS/Caremark controls 41.1% of the PBM market share of Florida Medicaid and CVS pharmacies fill 48% of all prescription drug claims for Florida Medicaid recipients, creating access issues especially in rural and innercity areas. Yet, CVS represents just 17% of community pharmacies in Florida.
The data are clear and show that these middlemen are entrenched in the system, resulting in millions of dollars in profit in taxpayer dollars, engaging in anti-competitive behavior and putting Florida’s Medicaid system at risk.
It’s past time the Florida Legislature fixes the shady practices of prescription-drug middlemen.
There is legislation filed (Senate Bill 1306/ House Bill 1043 and Senate Bill 390/House Bill 1155) right now that would bring greater transparency to PBMs. They are the first steps toward comprehensive reform, but it is what we need to empower patients, save taxpayer dollars and save community pharmacies.