Reporter: Tim Murphy
I had a shocking revelation recently. For several years here in my New York neighborhood in Queens, I’ve gone to the local CVS pharmacy for my HIV and other medications. It’s been fine overall, but I’ve often been met with long lines and staff who are less than friendly and helpful, which I can’t really blame them for because they seem so frantically overworked. But recently, I started popping in to a mom-and-pop pharmacy closer to my apartment for a toothbrush here or an ointment there. The store was often empty, and I liked how friendly and helpful the owner pharmacist was. Why, I asked myself, didn’t I just transfer my prescriptions (scripts) here? The nice pharmacist even offered to call CVS and do the transfers for me.
A few days later, when I stopped in, he gave me some disappointing news: He couldn’t fill my scripts because my health plan, Blue Cross Blue Shield, is linked to CVS Caremark, a pharmacy benefit manager (PBM) that, in turn, is owned by CVS Health Corporation. That meant that any plan that Caremark was linked to insisted that I get my medications at CVS Pharmacy alone. Even if he was allowed to fill my scripts, the pharmacist explained to me, he’d likely get reimbursed for them at a rate well below what he paid—something else PBMs do to steer patients to their affiliated pharmacies, which are always part of some big chain. And constantly being underpaid for medications, he said, would be unsustainable for him.
I left feeling indignant. Was I really not allowed to go to the pharmacy of my choice, especially a hardworking, intimate, independent pharmacy just blocks from my house, because of PBMs? Like many people, I’d previously only understood PBMs to be some sort of murky middleman between pharmacies and health plans. But now, I started to ask, “Just how widespread is this system after all?” I made a point of popping in to two additional indie pharmacies in my neighborhood and asking them if they often had to turn away customers because their health plans insisted they go to a PBM-linked pharmacy, or because a PBM would under-reimburse them.
Sure enough, I heard the same story from both of them as well. They even said that some PBMs forced patients to get their medications through mail-order only. While that can be convenient, what if you live with other people and don’t want them to know you’re taking medications? And what if, like me, you don’t live in a building with a doorman or that is otherwise penetrable and there’s always the chance that your medications are left on your front stoop, ripe for theft?
How widespread was the grip of these PBMs? And how might they be hurting not only indie pharmacies but customers with chronic illnesses, including but not limited to HIV? I decided to do some research.
The Genesis of PBMs
PBMs came into existence a few decades ago to process fees between health plans and pharmacies. And it turns out that only this July, the Federal Trade Commission (FTC) released a report showing the vast power they have taken on in the 21st century. Among other things, the report found the following:
The six largest PBMs in the U.S.—Caremark, Express Scripts, OptumRx, Humana, Prime Therapeutics, and MedImpact—had come to manage nearly 95% of all scripts filled in the U.S.
Using “vertical integration,” these six PBMs had come to own or be owned by or otherwise linked to some of the largest health plans or pharmacies in the U.S., as this chart from the report shows:
To quote from the report directly, “The top three PBMs processed nearly 80 percent of the approximately 6.6 billion prescriptions dispensed by U.S. pharmacies in 2023, while the top six PBMs processed more than 90 percent.”
Pharmacies affiliated with the three largest PBMs now account for nearly 70% of all specialty drug revenue.
But then the report went on to show exactly how this monopolistic situation affects independent pharmacies and the consumers who love them. According to the report, the largest PBMs often “exercise significant power over” drug availability and cost and which pharmacies you can choose to use―while steering people toward larger pharmacies. By prioritizing chain pharmacies, PBMs put forward contract terms that can harm independent pharmacies by cutting into their payment. They can also harm customers by limiting access to lower-cost generic competitor drugs.
Voices of Resistance
After reading this report, I felt compelled to find out what was happening to address this profoundly unfair situation. So I talked with John Farina, who is not only living openly with HIV but is the associate director of social media advocacy and training for the AIDS Healthcare Foundation (AHF).
Farina told me that he himself had a similar experience to those of so many others: The PBM attached to his health plan made him get medications via the mail to his home address. This presents a problem for people who do not live alone and wish to keep their serostatus private. Beyond privacy, the relationship between a person living with HIV and their pharmacist “is really important,” Farina said. “So if you take that away, you end up with a person who no longer feels the same trust [in their pharmacist] and may fall out of care.”
On Farina’s suggestion, I spoke to Monique Whitney, the Arizona-based executive director of Pharmacists United for Truth and Transparency (PUTT). PUTT, Whitney said, is a national group supported by about 1,200 independent and community pharmacies that is pushing for legislation to limit PBMs’ power. The organization seeks to force PBMs to make transparent the margins between actual costs and what they pocket for a drug in the form of myriad “transactions” or “administrative” fees. PUTT is also asking for transparency around what PBMs make pharmacies pay them—particularly small pharmacies, who don’t have the negotiating power of the big chains.
“We’re all very invested in fixing this problem from the standpoint of the patients, as well as of small business owners trying to survive,” Whitney told me during a phone interview.
On Friday, Sept. 13, Whitney told me, PUTT is planning a protest outside of the PBM OptumRx’s headquarters, near Minneapolis. “We’re not just talking about pharmacist self-survival,” she said, “but about a vast monopolization among a few very large entities and how they’ve changed the face of the health care system so much. There’s no transparency and no accountability.”
She claims that when representatives for the largest PBMs have gone before Congress, “they lied about how much they reimburse independent pharmacies. ... We don’t really know how much money the PBMs get, and we don’t know how much they’re really giving back. There’s no legal mandate for them to [tell the public].”
Whitney connected me to Teresa Dickinson, a PUTT founding member, board member, and former president who is also the owner of the independent Melrose Pharmacy in Phoenix, Arizona. The pharmacy is located in the heart of the city’s “gayborhood” and serves many people living with HIV. Shortly after Dickinson opened her pharmacy in 2005, she told me, “I started getting prescription denials from health plans saying, ‘No, this patient has to go to CVS’” because of PBM tie-ins. She also said it’s common that PBMs make pharmacists sign a contract, “but after that, they’ll fax us with changes in the contract and, for us, it’s take it or leave it—you either accept the PBM’s reimbursement rate or you don’t do any Caremark patients, and for me that’s over 55% of my patients.”... Continue Reading
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