Reporter: Andy Miller
While customers at Adams Family Pharmacy picked up their prescriptions on a hot summer day, some stopped in for coffee, ice cream, homemade cake, or cookies.
It wasn’t a bake sale, but the sweets bring extra revenue as pharmacist and co-owner Nikki Bryant works to achieve profitability at her business on the town square.
Bryant said she is doing all she can to bolster it against a powerful force that threatens her and other independent pharmacists: the middlemen who manage virtually all prescriptions written in the U.S., called pharmacy benefit managers, or PBMs. Serving as brokers among drugmakers, pharmacies, and health insurers, these health care entities have drawn scrutiny from Congress, the Federal Trade Commission, and state legislatures for their role in the increase in drug prices.
Bryant and other independent pharmacists say PBMs not only create higher costs but also make it harder for patients to access medications. So they were hopeful about state legislation this year that would have increased their reimbursement to match the average prices paid to retail chain pharmacies through the state employee health plan. But Gov. Brian Kemp vetoed the bill.
Kemp cited a fiscal estimate that it would cost the state as much as $45 million a year and said “the General Assembly failed to fund this initiative.”
Underlining the Georgia legislative reform effort against pharmacy benefit managers was an analysis by the American Pharmacy Cooperative, which represents independent pharmacies, that reviewed the price differential paid to a north Georgia pharmacy and nearby chain stores.
The analysis early this year showed chains were paid well beyond the family business for many of the same medications: For example, the chains received an average of nearly $54 for the antidepressant bupropion, while Bell’s Family Pharmacy in Tate, Georgia, got $5.54, the analysis said. For a drug used to treat blood pressure, amlodipine, chain pharmacies received an average of $23.55, while Bell’s got $1.51.
Bell’s Family Pharmacy closed earlier this year.
“The differences in Georgia are unbelievable,” Antonio Ciaccia, who runs Ohio-based consulting firm 3 Axis Advisors. “If you’re a pharmacist, you don’t have any control over which drugs you dispense and which you don’t.”
By controlling prices and availability, pharmacy benefit managers cause patients and employers to spend more for medications, according to the Federal Trade Commission and pharmacy groups. On Sept. 20, the FTC sued three of the largest PBMs — CVS Health’s Caremark, Cigna’s Express Scripts, and UnitedHealth Group’s Optum Rx, which together control about 80% of U.S. prescription drug sales. The agency said they created a “perverse drug rebate system” that artificially inflates the price of insulin. Each company denied the allegations.
The lawsuit followed a scathing FTC report in July that said the “dominant PBMs can often exercise significant control over which drugs are available, at what price, and which pharmacies patients can use to access their prescribed medications.”
The trade group that represents PBMs, the Pharmaceutical Care Management Association, said the insulin market is working well and blamed drugmakers for historically higher prices of the medication.
Bryant and other independent pharmacists, though, say they lose money filling certain prescriptions while reimbursements favor chain pharmacies like CVS that have corporate ties to pharmacy benefit managers. And even the chain pharmacies have retrenched, with CVS, Rite Aid, and Walgreens announcing layoffs or store closures in recent months.
“PBMs are like the mafia,” Bryant said. “They pay us what they want to pay us. They are sucking all the money out of health care.”
Pharmacy benefit managers will charge some health insurance plans more for a medication than what they reimburse a pharmacy, keeping the extra money as profit, critics say. This practice is known as “spread pricing.” Large PBMs also take money from drugmakers as a “rebate” to give their drugs preferential treatment on health plans’ lists of medications, independent pharmacies say. And by favoring certain pharmacies with whom they have business ties, experts say, these drug brokers help force independent stores such as Bell’s to close... CONTINUE READING
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