Table of Contents
Estimates project that prescription drug middlemen – pharmacy benefit managers (PBMs) – more than doubled their revenue over the course of the last decade and will do so again in the current decade. For example, Fortune Business Insights projects PBM revenues of more than $800 billion by 2030, and Grand View Research projects more than $900 billion.
Steven Anderson
That money has to come from somewhere. With ever-increasing power gained through consolidation and integration, PBMs essentially impose taxes on Americans by inflating prescription drug prices, and by imposing fees and terms that force pharmacies to sell medications below-cost, and ultimately to close their doors.
These middlemen also profit through tactics that meddle with the prescriptions written for patients by doctors, and that dictate the pharmacies that patients can use.
Fortunately, state and federal leaders are working on a bipartisan basis to bring about much-needed reforms. States have enacted more than 130 PBM reform laws over the past three years, and in February 39 state attorneys general called for federal reforms as well. In the current Congress, a U.S. Senate panel passed legislation including PBM reforms on a 26-0 vote, and the U.S. House of Representatives did so by nearly a 3-to-1 margin. Momentum is building to enact these bills.
In addition, the U.S. Federal Trade Commission (FTC), the U.S. House of Representatives Oversight and Accountability Committee, and others are reviewing the market dominance and manipulation of PBMs.
As a result, PBMs are resorting to scare tactics in an attempt to shake legislators and regulators off the trail of reforms that are needed to put people over PBM profits. In cynical attempts to muddy the waters, the middlemen are throwing populist buzzwords against the wall to see what sticks. In states including Texas, Alabama, and Illinois, the PBMs recently and erroneously have decried reforms as “mandates” – and, ironically, as “taxes.”
The problem for the PBMs is that the facts run contrary to their claims. In Alabama, the PBMs are branding “pharmacy dispensing fees” as taxes. They surely know this is a cynical manipulation of the truth.
In reality, there are two components of a pharmacy’s reimbursement for prescription drugs: that for the drug itself and a “dispensing fee” that covers overhead costs ranging from the pharmacists’ salaries to every aspect of store operations. What’s more, both aspects of pharmacy reimbursement have been under attack – and in many cases under water – for years, with pharmacies of all types and sizes now beyond the breaking point. There are much-needed efforts underway to remedy this devastating situation, and for the PBMs to brand these reforms as a “tax” is unconscionable.
None of this is surprising. For example, last year, the FTC warned PBMs not to cite the agency’s prior reports to argue against PBM reform, as those reports may not reflect current market conditions. PBMs have ignored this warning, and continue to do and say as they please. More substantively, U.S. Senator Chuck Grassley (R-IA) has called out the PBMs for dragging their feet and for not complying with information requests that are part of the FTC’s study of the PBMs’ treachery.
A wise person might ask: what would the PBM industry do or say to preserve unchecked tactics that result in a doubling and re-doubling of revenue?
We need not wonder. We are now finding out: they will say and do anything, and everything. And it is loathsome indeed.
Steven Anderson is the President and CEO of NACDS.
