As policymakers continue to seek answers on how to make prescription drugs more affordable, it’s clear that we must address how money flows in the drug supply chain. This is particularly the case when it comes to pharmacy benefit managers (PBMs).
These middlemen companies were created to leverage significant bargaining power to negotiate discounted prices for prescription drugs for their clients – health insurers, self-insuring employers, and state employee and Medicaid programs. Today, there are persistent questions as to whether PBMs are actually fulfilling that role and delivering greater affordability.
Impact on Insulin
Last year, the U.S. Senate Finance Committee investigated why patients with diabetes were experiencing soaring prices for insulin. The committee found, to cite one example, that the negotiated net price for one insulin product had declined by 53% even as the list price rose by 141%. The problem lies in the fact that co-insurance charges paid by diabetes patients at the pharmacy counter are based on the list price, not the discounted price the PBMs are getting. In other words, middlemen pocket the discounts for themselves rather than passing them along to consumer.
This is a particularly serious dilemma for Hispanic Americans who, according to the U.S. Department of Health and Human Services, Office of Minority Health, are:
- 1.3 times more likely than non-Hispanic whites to die from diabetes (2018).
- 70 percent more likely than non-Hispanic white adults to be diagnosed with diabetes by a physician.
- twice as likely to be hospitalized for treatment of end-stage renal disease related to diabetes, as compared to non-Hispanic whites (2017).
Consumers Face an Unfair Disadvantage
To understand how this can happen, it’s necessary to review how the PBM industry has consolidated in recent years. Today, just three PBM corporations control almost 80% of the prescription drug marketplace. This control of the market gives PBMs enormous power in negotiations with pharmaceutical companies. They can exclude drugs from the list of medications covered by insurance, called formularies, if those medications aren’t sufficiently lucrative for the PBM. In 2022, it was reported that the largest three PBMs collectively excluded about 1,200 products from their formularies, making them essentially inaccessible to patients.
Loss of Community Pharmacies
The high co-pays hitting minority communities especially hard are being compounded by a gradual disappearance of community pharmacies altogether. The major PBMs own either mail-order pharmacies or drug store chains, and steer patients toward the pharmacies they control. Another PBM practice involves charging independent pharmacies with significant fees well after they sell a prescription to a consumer.
The result has been catastrophic for many communities. Since 2018, over 8,000 pharmacies nationwide have closed their doors for good. Independent pharmacies are disproportionately located in minority neighborhoods. When a local drugstore in a minority community is forced out of business, it not only takes away an easily accessible place to pick up medications, but it’s also a loss of a center for health counseling, vaccinations, and walk-in clinic services, www.childinjuryfirm.com/ativan-lorazepam. For older citizens, the lack of a nearby pharmacy can have a huge detrimental impact on their health.
PBM Impact on Health
If out-of-pocket costs at the pharmacy counter continue to increase, more consumers – particularly those who are low-income and/or underserved – are going to be faced with difficult choices between shelter, food, and medicine. A study found that 125,000 deaths each year are tied to lack of medication adherence. This tells us there will be a greater urgency to address the high-cost drivers that exist in the prescription drug supply chain. And the most practical way to do it is by reforming how PBMs operate in the system.
To learn more, visit nclnet.org/pbms.
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