PBM Math: Large chains get $23.55 for blood pressure prescriptions, while small pharmacies get $1.51

CUTHBERT, Georgia. While customers at Adams Family Pharmacy were picking up their prescriptions on a hot summer day, some stopped by for coffee, ice cream, homemade cakes or cookies.

It wasn’t a bake sale, but the sweets bring in extra income as pharmacist and co-owner Nikki Bryant, PharmD, works to make her Town Square business profitable.

Bryant said she’s doing everything she can to support him against a powerful force that threatens her and other independent pharmacists: pharmacy benefit managers (PBMs), the middlemen who manage virtually all prescriptions filled in the United States. Act as intermediaries between drug manufacturers, pharmacies and pharmaceutical companies. health insurers, these health care organizations have come under scrutiny from Congress, the Federal Trade Commission (FTC) and state legislatures due to their role in rising drug prices.

Bryant and other independent pharmacists say PBMs not only increase costs, but also make it harder for patients to access medications. So they were hoping that state law this year would increase their reimbursement to match the average prices paid to retail pharmacies under the state employees’ health insurance plan. But Gov. Brian Kemp (R) vetoed the bill.

Kemp provided a budget estimate that it would cost the state $45 million a year, and stated that “the General Assembly has failed to fund this initiative.”

Efforts to reform Georgia’s anti-PBM laws were highlighted by an analysis by the American Pharmacy Cooperative, which represents independent pharmacies, which looked at the difference in prices paid to a pharmacy in north Georgia and nearby chain stores.

An analysis earlier this year found that for many of the same drugs, chains received far more than family-owned businesses: For example, chains received an average of nearly $54 for the antidepressant bupropion, and Bell’s Family Pharmacy in Tate, Georgia , received $5.54, the analysis said. For the blood pressure drug amlodipine, chain pharmacies received an average of $23.55, while Bell’s received an average of $1.51.

Bell’s Family Pharmacy closed earlier this year.

“The differences in Georgia are incredible,” said Antonio Ciaccia, principal of Ohio-based consulting firm 3 Axis Advisors. “If you’re a pharmacist, you have no control over what drugs you dispense and what you don’t.”

By controlling prices and availability, PBMs force patients and employers to spend more on drugs, according to the FTC and pharmaceutical groups. On September 20, the Federal Trade Commission sued the three largest PBMs—CVS Health’s Caremark, Cigna’s Express Scripts and UnitedHealth Group’s Optum Rx, which together control about 80% of prescription drug sales in the United States. The agency said it created a “perverse drug discount system” that artificially inflates insulin prices. Each company denied the allegations.

The lawsuit followed scathing report from the Federal Trade Commission in July, it said that “dominant PBMs can often exercise significant control over what drugs are available, at what price, and at what pharmacies patients can access their prescribed drugs.”

The trade group representing PBMs, the Pharmaceutical Care Management Association (PCMA), said the insulin market was performing well and blamed drug makers. due to historically higher drug prices.

Bryant and other independent pharmacists, however, say they lose money filling certain prescriptions while reimbursements go to chain pharmacies like CVS that have corporate ties to PBMs. And even chain pharmacies have cut back, with CVS, Rite Aid and Walgreens all announcing layoffs or store closures in recent months.

“The PBMs are like the mafia,” Bryant said. “They pay us what they want. They’re sucking all the money out of health care.”

PBMs will charge some health plans more for drugs than they reimburse the pharmacy, leaving the extra money as profit, critics say. This practice is known as “spread pricing.” Large PBMs also take money from drug makers as a “rebate” for giving their drugs preferential treatment on health plans’ drug lists, independent pharmacies report. Experts say that by favoring certain pharmacies with which they have business ties, these drug dealers are helping to force independent stores like Bell’s to close.

Kemp’s veto came despite the GOP-led General Assembly overwhelmingly voting in favor of Senate Bill 198 on the final day of the legislative session.

Kemp spokesman Garrison Douglas said, “The Governor continues to fully and wholeheartedly support Georgia’s independent pharmacists and the need for PBM transparency.”

In his veto message, Kemp expressed support for research into independent pharmacy drug reimbursement and PBM practices. And he said independent pharmacists will receive an additional $3 pay this year for filling prescriptions for state employees.

That’s according to the state Department of Public Health, which oversees the state’s health benefits plan. KFF health news that CVS Caremark, a PBM that does business for government employees, provided cost estimates that Kemp used to justify his veto.

Fiona Roberts, a spokeswoman for Public Health, said the department did not have time to conduct its own analysis.

CVS Caremark said it used historical claims data to calculate the impact of higher reimbursement on costs.

Nationally, criticism of PBM practices intensified in the summer following the FTC report.

PCMA counters by saying the report is “based on anecdotes and comments from anonymous sources and vested interests and is supported only by two carefully selected case studies purportedly representative of the entire market.”

Members of both parties in Congress have taken up PBM reform. House members recently introduced another proposal, known as the Pharmacists Fight Act, which supporters say would increase transparency, cap costs for patients, ensure they receive rebates from drug makers and protect their choice of pharmacies.

Consolidation that combined health insurers with PBMs, including their own retail, mail order and specialty pharmacies, created financial giants, said U.S. Rep. Buddy Carter, R-BSPharm. “I’m interested in their arrest,” he said.

Alexander Oshmyansky, MD, co-founder of pharmaceutical company Mark Cuban Cost Plus, said PBMs siphon off about a third of the $400 billion spent annually on pharmaceuticals.

“What could we do as a society with $100 billion instead of paying some companies to process drug payments,” Oshmiansky said.

PCMA, a trade group, cited report financed by the three largest PBMs, which said their operating margins were less than 5%.

And the group says congressional reform discussions “reflect a one-sided view based directly on a pharmaceutical industry blame game designed to smear PBMs in order to keep prescription drug prices high and boost drug company profits.”

But underpayments by PBMs have accelerated the closure of family pharmacies across the country, said the National Association of Community Pharmacists, which represents independent pharmacies.

The U.S. is losing nearly one such pharmacy a day, said Anne Cassity, the association’s senior vice president. According to her, rural pharmacies are especially vulnerable, which are difficult for patients to reach due to lack of transport.

Bryant’s two pharmacies deliver medications to several counties, including to patients with limited access or no transportation. Cost to patients: zero.

Most states have adopted some version of oversight or restrictions on PBMs.

In Montana, state officials have been collecting financial statements from PBMs for the past two years after passing a law to increase transparency at those businesses.

Data for 2022 show that rebates in Montana are rarely passed back directly to the people purchasing the prescriptions. Instead, PBMs pocket them or return them to health plans.

Josh Morris, a pharmacist who owns three independent rural pharmacies in southwest Montana, said his pharmacies have seen their reimbursement rates drop for drugs purchased through PBM-managed plans.

Morris said his business usually either makes money or loses money. “Our plan is that once we reach a certain level of cash flow, we will exit the game,” Morris said. “As in ‘closed.'”

Frank Cote of the Montana Insurance Commissioner’s Office said the state is trying to make it easier for small pharmacies to do business, but state officials still have no control over what PBMs are paid. Cote said the state will look for ways to support rural pharmacies through existing regulations or future legislation.

After Kemp’s veto in Georgia, pharmacy pay disparities drew criticism from an unusual place: the board of the state Department of Public Health, the agency that administers the State Health Benefits Plan.

Mark Shane Mobley, a board member, said at the August meeting that government employee pay for independent pharmacies should be on par with chains. The PBM’s profits “will line the pockets of people far out of state,” said Mobley, president of Avilys Sleep & EEG, a Georgia-based provider of sleep disorders and electroencephalogram testing. “Our independent pharmacies employ people locally. They care about the local community.”

Public Health Commissioner Russell Carlson said the agency is in ongoing dialogue with CVS Caremark, the PBM that handles government employee plan drugs.

“We don’t bury our heads in the sand. We know there is some frustration in this area,” he said. “But we recognize that we have contractual obligations.”

In Cuthbert, Bryant said she could make more profit from cakes and coffee than from many drugs.

Still, she stays in business even though the nearby CVS pharmacy recently closed. “We beat them in quality of service,” Bryant said.

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