Affordable drug advocates claim victory over pharmacy benefit managers in budget bill

Reform is in the air — and, more importantly, in legislation approved by Congress and the White House — for pharmacy benefit managers (PBMs), according to advocates who argue PBMs have unfair clout in U.S. drug pricing.

But a major PBM trade organization said the real victory goes to Big Pharma with ever-growing drug prices.

The policy development happened at the start of February, though the arguments over PBM operations and transparency have lasted years. On Feb. 3, President Donald J. Trump signed the federal spending bill with key reforms for PBMs. With him was Rep. Earl L. “Buddy” Carter (R-Georgia), who has been vocal about PBMs and pharmaceutical prices and policy at the national level. A career pharmacist, Carter also has described his experiences working at the counter and consoling patients disappointed about costly medicines.

Carter claimed “a major win for patients and pharmacies” over “the PBM mafia.” The new policies will increase transparency, preserve patient access to care, and lower health care costs by reforming PBMs that acts as middlemen between Big Pharma and patients, he said in a statement.

“As a pharmacist from coastal Georgia, I came to Congress with the goal of building a health care system that put patients before profits,” Carter said. “Today, I can proudly say that we have enacted the first major PBM reform in decades, a meaningful step toward achieving that goal. PBMs have been stealing hope and health from the American people for decades, inflating prescription drug costs, forcing pharmacy closures, and blocking access to medications. To that I say: Not on my watch.”

Bust up vertical integration

It was far from Carter’s first statement on the issue. In a Medical Economics interview, he cited his own experience as both pharmacist and businessman, because in the American economy, people have a right to make a living and businesses have a right to exist and make profits.

“Look, I owned my own pharmacy for 32 years. Yes, I wanted to service as patients but I also wanted to make a living as well, and there's nothing wrong with that. However, as I mentioned before, what has happened is that PBMs evolved into something they were never intended to be. When they started out all they were, were just processors. They've just processed claims. That's all they did.”

But PBMs grew to become significant players in the vertical integration of U.S. health care, Carter said.

“We all know about the vertical integration that exists now, particularly in the drug pricing chain, where you have the insurance company that owns the PBM that owns the group purchasing organization that owns the pharmacy, that in many cases owns the doctor and employs the doctor,” Carter said. “And that vertical integration has led to an increase in prescription drug prices.”

PBMs have argued they save money for patients by negotiating price discounts for drugs. Carter said supposed savings don’t show up in either health insurance premiums or in lower prices at the pharmacy counter.

Drug stores united

For years, the National Community Pharmacists Association (NCPA) has railed against “PBM Fat Cats,” which also is the title of its latest digital ad depicting the pharmacy benefit managers as felines corpulent in body and callous in business.

“We’ve been warning that unless action is taken, more pharmacies will close, and more pharmacy deserts will grow,” NCPA President B. Douglas Hoey, PharmD, MBA, said in a statement. “Unfortunately, as time passed, we were proven correct and finally, there is action to help reverse these trends.”

The National Association of Chain Drugstores also supported legislation that would rein in PBMs.

“The abuses of the dominant PBM middlemen are widely recognized, and this landmark federal action reflects the broad, bipartisan commitment to confront and remedy them,” association President and CEO Steven C. Anderson said in a statement. “This is the most important federal achievement yet for PBM reform, and it will sustain and build momentum for further reforms where needed.”

More than a pound of flesh

Compounding pharmacists — at times slammed by Big Pharma as less reputable market share usurpers — could see the effects on prescription drugs approved by the U.S. Food and Drug Administration. Alliance for Pharmacy Compounding CEO Scott Brunner, CAE, told Medical Economics it would be unusual for him to defend large drug makers. But they had costs of doing business that in recent years drove up prices for the blockbuster GLP-1 drugs for diabetes and obesity.

“They've also got the pound of flesh, and it's actually well more than a pound of flesh, that pharmacy benefit managers extract from the drug supply chain,” he said.

‘Now what?’

Pharmaceutical Care Management Association Chief Communications Officer Brendan Buck, published a memorandum, “PBM Reform is Done … Now What?” that acknowledged “a remarkable moment.”

“Not for the impact on drug prices (higher),” he wrote. “But rather because it is the culmination of a years-long effort by drugmakers to convince Congress that PBMs are the problem with high drug costs.”

The pharmaceutical industry is the real force behind that “feat of illogic.” “It’s what you can do when you have nearly unlimited resources to distract Washington from the problems you primarily have created,” Buck said.

The better reform would be greater oversight of Big Pharma, Buck said.

“It is long past time for lawmakers to look into the ways the pharmaceutical industry games the system to block competition and artificially keep drug prices high,” he wrote. “Patent abuse, shadow pricing, direct to consumer advertisements, pay for delay, switching … the tactics are many. All of them in service of keeping prices high.”