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Pharmacists, Pharmacy Benefit Managers, argue over high drug, business costs at hearing

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Pharmacists, Pharmacy Benefit Managers, argue over high drug, business costs at hearing

House committee unsure of recommendations to make to Legislature after second meeting to address Pharmacy Benefit Managers

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State lawmakers’ attempt to hear explanations of rising prescription drug costs on patients and pharmacies turned into a heated exchange Wednesday between pharmacists, legislators and the middlemen who set procurement and sale prices for drugs sold to patients.

The rub? If nothing gets done, patients could end up pinched for ever-more expensive drugs or longer drives to pharmacies in their coverage network. The current situation could also leave Mississippi without stronger legal protections, lawmakers and state officials said during a meeting of the House Prescription Drug Policy Taskforce Committee.

“There’s a lot of people that don’t have gas money to drive 25 miles to go get their medication filled,” said Committee Chairwoman Beth Waldo, R-Pontotoc. “A lot of times it’s a life-or-death situation. You’ve got to have medicine.”

At the core of the problem, according to the pharmacists, is a lack of transparency between what those middlemen negotiate with employers and drug manufacturers versus what they negotiate with pharmacies on price and contract terms.

Those middlemen are Pharmacy Benefit Managers, whose representatives during the meeting refuted claims of being unfair toward independent pharmacies, inflating drug prices, prioritizing their own pharmacies and not negotiating drug procurement and price terms with local pharmacies.

They stuck the issues on Pharmacy Services Administrative Organizations, which represent pharmacies to negotiate with Pharmacy Benefit Managers, drug manufacturers who set the initial price of the drug before it enters a market and the employers who pay Pharmacy Benefit Managers to negotiate with pharmacies at specific prices.

“It’s not in our interest to put these folks out of business,” said Tony Grillo, the vice president of financial analysis for ExpressScripts, one of the nation’s largest Pharmacy Benefit Managers. “This is a critical relationship. The unfortunate part of this relationship is our role. When a plan sponsor hires us, they’re hiring us to negotiate the best price for them.”

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Michael Power, a representative of the Pharmaceutical Care Management Association, said Pharmacy Benefit Managers also want to make negotiations with pharmacies more transparent. Power also said there are several factors going into why different pharmacies receive different prices.

Several legislators said the explanations weren’t good enough.

“I have seen things from independent pharmacists, from my own pharmacist that couldn’t fill my prescription because they cost him more than what he was paying,” said Rep. Stacey Hobgood-Wilkes, R-Picayune.

What is a PBM? What are some of the other issues?

Pharmacy Benefit Managers, or PBMs, act as a sort of middleman between insurance agencies, employers that pay for employee health plans and pharmacies for facilitation fees. They also regulate which of the drug manufacturers’ products are on a list of approved products within a plan sponsors employee health network. 

The three largest PBMs in the U.S. are CVS/Caremark, ExpressScripts and OptumRx. Typically, they make money by getting rebates and discounts from drug manufacturers to approve products, as well as pay pharmacies less than what they charge employers and insurers. PBMs can also claw back reimbursements to pharmacies for breaking the terms of a contract.

Earlier this year, the Federal Trade Commission released a report detailing how PBMs have incentives to work with their affiliated pharmacies more than others, left local businesses without leverage to negotiate drug price or reimbursement terms and rates.

Bob Lomenick, a pharmacy owner in Holly Springs, said one of the largest issues he has faced is not being at the table with companies to negotiate.

“They give us take it or leave it contracts,” Lomenick said. “If they got 90% of the prescriptions, and they send me a contract that I do not accept, then I’ve got a lot of patients that cannot come to my pharmacy. I’ve been practicing at my pharmacy for 40 plus years. I’ve never, not one time, been able to negotiate a contract (with PBMs).”

What solutions are now being considered?

A bill in the 2024 Session seeking to address PBMs was killed after interest groups representing companies in the banking sector lobbied against it, fearing the legislation would raise business costs, Waldo said.

Aside from pharmacists asking for more transparency, Mississippi Board of Pharmacies officials asked for more teeth to be added to state laws regulating PBMs, including ways for the board to issue more equitable fines for violations and go after violators.

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“It is just tightening up some holes here and there so that it can withstand legal challenges,” said Todd Dear, associate director of the Mississippi Board of Pharmacy.

Waldo said the committee would plan to make final recommendations on what the Legislature should do after it wraps up several more hearings later this year.

 Grant McLaughlin covers state government for the Clarion Ledger. He can be reached at gmclaughlin@gannett.com or 972-571-2335.

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