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I believe an appropriate way to frame our understanding of the Pharmaceutical Benefit Managers is to briefly summarize who they are, what they do, and how we got to where we are today. PBMs initially emerged to help manage the prescription drug component of health insurance plans, handling tasks such as processing claims and managing the lists of covered medications. They acted as a third party to help provide Alabamians and their employers the access to affordable prescription medications. This design was well intended and did influence overall price leveraging and access to patented therapeutics.
But as with most bureaucratic middlemen, if you give them an inch – they take a mile.
Over the decades, PBMs have grown significantly in influence and complexity, now playing a role in setting (exorbitant) drug prices, developing ludicrous formulary lists, and strong-arming community pharmacies into insensible reimbursement rates.
I would be remiss to not provide perspective on how PBMs garnered this much power. PBMs have consolidated the pharmaceutical delivery of medications through a process known as Vertical Integration. In the context of PBMs, vertical integration involves merging with or acquiring other entities within the pharmaceutical supply chain, such as pharmacies (see CVS Pharmacy & Caremark), drug wholesalers, and even insurance companies. This integration allows PBMs to control multiple aspects of the distribution process, from negotiating prices with manufacturers, dispensing medications to patients, and setting reimbursement rates.
So, why should this matter to Alabamians?
You should be concerned that your Alabama community pharmacies are closing in droves due to the actions of PBMs. Alabama has approximately 500 community pharmacies remaining in business. Over 300 hundred have closed in the last six years. Many of our most vulnerable residents used these community pharmacies because of the amazing customer service, quality care, and extended services they provide. From thorough medication counseling, access to difficult-to-stock medications, and home delivery services – community pharmacies have been and will continue to be integral parts of our cities and towns. When these pharmacies close, and they will with the current practices of PBMs, we will begin to see larger occurrences of gaps in therapy for residents. With less community pharmacies, Alabamians will have less access to medications, contributing to less adherence in important medication therapy such as diabetes and cardiovascular treatment. Not to mention we are limiting availability to the communities most accessible healthcare professional: The Pharmacist. This is a barrier to care that each resident, each employer, and our state legislators should be considering.
In our community pharmacy, we see reimbursements falter every day. For the month of April alone, our small independent pharmacy in North Alabama dispensed 583 brand name drugs. The average cost of the 583 drugs were upwards of $290,000. Of the 583 purchased, only 40 prescriptions were reimbursed to us at the cost or slightly above what we purchased the medication for. ONLY 6 PERCENT OF THE MEDICATIONS THE PBMS REQUIRE FOR COVERAGE WERE PAID BACK TO US AT OUR ACQUISITION COST. This business plan would not last long on Shark Tank. Unfortunately, your community pharmacy is experiencing this to a similar or greater degree. You may ask how this is sustainable? How can our pharmacy continue to pay our employees, purchase supplies, and even pay to keep the lights on? The short answer – it can’t. Community pharmacy will die in our state at the helm of the Pharmacy Benefit Manager and every Alabamian will be subject to the neglect and harm that will come from the PBM-owned pharmacies if we don’t act soon.
Community Pharmacy opposition attempt to make this a partisan issue, highlighting that it is rooted as a democrat, left-wing supported agenda and ties it into contentious topics such as “Medicare for All” and “Big Pharma”, therefore stigmatizing any discussion over PBM practices. They will lump this issue with proponents in efforts to deface any oversight for the PBMs. They say it doesn’t fit the mold for the values of Alabamians. However, in traditional blue states, they will say the opposite – that this is right wing supported agenda with proponents such as Sen. Pat Toomey (R) – likely the largest advocate for PBMs to date. That any initiatives to deconstruct the powers of PBMs is anticapitalism and hurts economic prosperity. The reality is that access to affordable prescriptions should not be political. It should not be left wing nor right wing. We should not make affordable prescriptions a divisive topic to dangle over the heads of our Alabama taxpayers. The truth is that PBM advocates want to allow the discourse to continue. Our legislators should find common ground to address how we should hold these companies accountable to the Alabama resident and to the Alabama businesses.
If I lost you during this entire tirade, I ask that you at least center in on this section carefully. This is where I think Alabama should pivot from here:
- Develop a mixed professional oversight committee with all registered parties, including Pharmacists, Legislators, Medical Doctors, plan sponsor affiliates, and Alabama residents to provide oversight on PBM actions. At the moment, no such organization exists, nor is there any actionable enforcement of existing laws.
- Require PBMs to be auditable and provide transparent, itemized lists to the public. PBMs rake in their profits in the shadows. Transparency is the key to driving down our costs.
- Contact your legislators on a regular basis and let them know you want your community pharmacy to stay in business. Rep. Phillip Rigsby and Sen. Tom Butler are great resources for advocating for PBM reform. Support their work!
- Support your community pharmacy and pharmacist. Stop in and ask them about these heinous efforts and how it is affecting their business. Let them provide you with specific examples of how these multibillion-dollar conglomerates are ruining access to medications in Alabama.
Alabama has an opportunity to right the ship. Let’s push for PBM Reform, support small business, and work to ensure affordable and equitable access to medications in our state.
